Sony’s Recovery Part 1 of 3: Kaz Hirai’s plan to get out of non-core businesses

January 30, 2013

Sony PlayStation doomsday theories debunked: on track for a comebackMany eyes are on Sony and its newly appointed CEO, Kazuo Hirai, or simply known as “Kaz” in the gaming circles as he continues to follow through on his initiative laid out a year ago. Hirai initiated a plan to make Sony leaner and more agile by getting out of profit losing businesses and to focus on its core divisions such as LCD/OLED imaging, the PlayStation brand and mobile.

Getting Out of Non-core Businesses

Just last year Hirai made sweeping changes which at first raised some eyebrows but ultimately ended up reducing the red in the financial quarters and increasing share value. Just recently Sony sold one of its New York buildings for $1.1 billion, which initially garnered some criticism. The gut reaction was that Sony is in trouble and is desperately selling off its property.

However, this was a calculated move on Sony’s part and involved careful negotiations for some time to squeeze every penny out of the “non-core” asset. Doug Harmon, senior managing director at Eastdil Secured LLC, who represented Sony in the negotiations stated:

The fact that we had, at the end of our process, four diverse groups poised to pay $1.1 billion, some with leases and contracts already negotiated, is a true testament to the hunger for prized properties.

Sony initially paid $236 million for the 32 story building back in 2002 from AT&T and was able to sell it for more than four times that cost. Many analysts believe this was the smart move on Sony’s part as it housed business units from its non-core divisions such as Sony Music Entertainment. Investors apparently also felt this was a smart move as the company’s shares increased by 12 percent on the heel of the news. As part of the deal, Sony will continue to occupy the building for the next three years until it finds a new headquarter.

Sony recently revealed that it was also looking to sell its battery division with factories in China and Singapore valued close to $600 million. The Japanese government is offering to provide state-backed funding to firms who will invest with Nissan-NEC venture to purchase Sony’s battery division. This is all in efforts to prevent China from acquiring this business unit.

Clearly we are seeing a pattern here with Hirai as he is making good on his promise to literally get out of the business sectors that are unprofitable. Its obvious that when you spread yourself out too thin, sectors that you are not strong in will become a burden on the company.

If you are no where near the top of the competition technologically or from a business standpoint in markets such as batteries, camera lens, chips and chemical manufacturing sectors it just doesn’t make sense to continue to carry the overhead as it will only drag the company down.

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Sony’s Recovery Part 2 of 3: on track for a financial comeback

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28 Responses to “Sony’s Recovery Part 1 of 3: Kaz Hirai’s plan to get out of non-core businesses”

  1. dans:

    Lots of raised eyebrows in that article. ;)

  2. phranctoast:

    Sony feels thin, sort of stretched…. Like butter scraped over too much bread. ;)

  3. Roca.:

    Mike – “If you are no where near the top of the competition technologically or from a business standpoint in markets such as batteries, camera lens, chips and chemical manufacturing sectors it just doesn’t make sense to continue to carry the overhead as it will only drag the company down”

    Camera sensors & lenses is one of Sony’s core business. In fact I believe they’re the market leader, providing censors to the iPhone and many other camera and smartphone manufacturers.

    http://image-sensors-world.blogspot.com/2012/05/tsr-market-share-data-for-2h-2011.html?m=1

    Sony 3 core businesses are:
    -Digital imaging (sensors, lenses, cameras, etc)
    -Gaming
    -Mobile

    h**p://www.sony.net/SonyInfo/News/Press/201204/12-056E/index.html

  4. Mike Ferro:

    Your correct Roca, however Sony is getting out of the Lens manufacturing business when it sold its Minokamo plant, because I assume the profit margin is too thin. Sony will continue to push forward in photography and imaging but will most likely outsource manufacturing.

  5. Roca.:

    Idk why but this video almost made me buy this game l

    http://www.youtube.com/watch?v=qD58oPKdVVg&feature=youtube_gdata_player

  6. oldschool1987:

    “Sony feels thin, sort of stretched…. Like butter scraped over too much bread.”

    Lol I love Blade II, that’s my favourite line from that movie.

    …Joke, incase anyone thought I was serious. It was obviously Rocky V ;)

  7. MAK:

    I dont want Sony to stop making cameras. Thats the only brand I buy when I get one.
    And I hope they keep making movies with their own technology.

    @Roca

    That game would be much better on something with buttons, not a touch screen.

  8. CarlB:

    Personally own the cyber-shot… at the time of purchase I liked the quality for the price point… but smartphone cameras are really gaining in quality. Of course if you want the best quality you’ll stick with a standalone, but even pros are simply starting to use things like olloclip with iPhone for convenience sake.

    I agree though, they need more focus, as pretty much every electronic product category they are not number one in is from competitors who have more focus on the particular product.

  9. CarlB:

    Holy crap… Amazon just rocked the house AGAIN… checked my inbox and read the email Amazon sent me notifying me that each of the CD’s I bought as far back as 2008 from Amazon are now available to me for free in their cloud player. Outstanding.

  10. MAK:

    @CarlB

    I own a nice little cyber shot, it was almost 400 dollars when I got it. Now they are worth 200 at most.
    It’s a great camera, but now my iPhone has surpassed it sadly.
    Yet, the iPhone doesn’t have the zoom and focus capabilities the Cybershot does, so you’re right.

    If you get the Sony cameras that are near 700-1000 dollars, they are incredible. They really make a difference compared to Canon and other brands.

    I had the same thing happen to me with amazon. I bought a few CDs for someone else as a gift, then I recently got an email saying that all the CDs were available for me to listen to in my cloud player. Lmao. I should thank the person I bought the CDs for.

  11. CarlB:

    lol… same here, they were mostly gift CD’s.

  12. Godless:

    I have a Sony DSLR A200 camera. . Entry level with a sub par kit lens, but a stunning camera all the same. There is no mobile or ipad type camera on the planet that comes even close to the quality it can achieve, even with the kit lens. in fact when I bought it, to get a camera that performed as well from th ecompotition you were looking at paying dubble what Sony was selling the A200 for. Probably the best product I have ever bought

    I actually hate all the mobiles and ipads for the blatant false advertisement where they’re shown taking “action shots” in perfect focus with amazing clarity on main subject and nice depth of field blur to backdrop. .MY F@~#CKNG ARSE!

    They are piss poor at anything other than casual snaps, usually lacking real clarity due to slight motion blur or poor focus and lacking any real detail even when the image is not duffed, there is almost always way too much noise in the image when it’s taken in anything other than perfect light.

    It’s one of my pet hates that there is now a backward trend in digital photography as more and more people are using piss poor cameras on mobiles instead of dedicated cameras..

  13. phranctoast:

    “Holy crap… Amazon just rocked the house AGAIN… checked my inbox and read the email Amazon sent me notifying me that each of the CD’s I bought as far back as 2008 from Amazon are now available to me for free in their cloud player. Outstanding.”

    I heard this recently too. When I checked, none of the CD’s I bought were available. Maybe they added them in the meantime. :(

  14. phranctoast:

    We have Sony cameras at work for inspection purposes, but I find myself just using my phone lately as the picture quality gets set down to 3 megapixel anyway so as to not kill our database which is web based.

  15. CarlB:

    @phranc,

    My guess is they don’t have all the music labels covered yet, and probably won’t, as it may well be a similar situation to video streaming.

    “It’s one of my pet hates that there is now a backward trend in digital photography as more and more people are using piss poor cameras on mobiles instead of dedicated cameras..”

    More people are taking pictures that wouldn’t have before because they have cameras on their phones. Today’s phone cameras are exceptionally better than than the first digital cameras I remember, and they will likely continue to increase in quality over time. Not to mention professional grade digital cameras are now much less expensive/more capable than they used to be. That’s pretty much good news all around.

  16. phranctoast:

    I just checked it again and it’s all there…or most of it.

  17. phranctoast:

    I would be absolutely ecstatic if All the movies I bought got the same “unlock” treatment from Amazon Instant video, and All the books I bought from them did as well.

  18. CarlB:

    lol… get’s something for free out of the blue… wants more.

  19. Roca.:

    The quality of a Smartphone camera (hardware & software) are nowhere near as good as a stand alone camera. They are just good enough most ppl because fb and instagram will resize your pics to shit.

    I have Sony Cyber-shot camera with 18mp, 20x optical zoom, 30x digital zoom, GPS and WiFi. It also has many features and modes that you will never find on a smartphone camera, it takes amazing low light pictures. All for $299

  20. CarlB:

    Yes, but can you make phone calls and surf the web on your camera? ;) jk.

  21. Roca.:

    maybe you could ;)

    http://www.amazon.com/Factory-Unlocked-Samsung-EK-GC100-Android/dp/B009K27FMK/

  22. CarlB:

    Is that a “smartphone camera”? I thought the quality on those was “nowhere near as good”? ;) jk.

    I think the lines are only going to continue to blur as camera quality on smartphones continues to improve, as it already has been for years. That said, I’ll stick with my humble little cyber-shot over my old iPad/iPod touch for now… at least until I upgrade later this year or next.

    Essentially, iPhone pretty much already has the key ingredients of a professional camera, all that is really needed is a proper lens attachment, however, some cases I’ve seen (which can also make it look like a professional camera) look like they could be beneficial as well. Though it’s current weakness still seems to retain some grainy “noise”, it’s not nearly as much as the previous model, and I suspect will only continue to improve.

    “The results are pretty amazing – the iPhone takes worse photos but it certainly stacks up against a $4,000 professional camera…
    While the $3,500 DSLR obviously comes out on top (as it should), the comparison shows that phones are definitely getting to the point of being very respectable point-and-shoot cameras…
    Phones these days can probably shoot better photos than many of the top-of-the-line digital cameras from over a decade ago.”

    http://www.petapixel.com/2012/09/24/iphone-5-camera-sensor-pitted-against-the-canon-5d-mark-iii/

  23. CarlB:

    Obviously, Sony did an outstanding job with the iPhone 5 camera sensor. Hopefully it will help to get them back in the black.

  24. CarlB:

    http://mashable.com/2012/11/29/iphone-5-camera/

  25. Godless:

    Carl

    In the link comparing the D5 against the iphone, the photographer is a moron.

    Firstly, he has not used the correct equivalent lens, resulting in an image for the D5 where only the stop sign is actually in focus (you can read the small text, where you cannot on the iphone image due to lack of clarity and too much noise). On the D5 the rest of the image is out of focus and appears blurred, not because of the limitations of the camera, but because the depth of field is too shallow for the lens he used for the shot he was trying to get. He was probably zooming in to try and get the same framing as the iphone, the more you zoom the shallower the depth of field gets, till eventually you only have a few centimetres of focal clarity.

    These iphone clip on lens things are also laughable, the problem is not just the tiny built in lens(which you still have to go through, your just adding even more glass & distortion on top of the final tiny lens) the problem is the small sensor array.

    If they ever want to improve the quality, the need bigger sensors, and bigger lenses simple as that

  26. Godless:

    and yes I know they are a whole lot better than they used to be, but a camera, will always out perform a phone almost regardless of how many mega pixels you have.

    My 10.2 mega pixel A200 will be out performing any phone camera for the foreseeable future regardless of how many mega-pixels they claim to have on the phone.

    It even out performs modern fixed lense cameras, even when they are up to 18 mega-pixels and higher. With cameras. .size matters. . sensors & lenses. .bigger really is better :)

  27. CarlB:

    How much larger are sensors in dedicated cameras? I really don’t know, as I haven’t opened one up to find out.

    Also, did you see the link roca posted? This is the basic idea. All they really did was put a smartphone into a camera form factor w/lens. Like the link I posted, if you move past the first image in the slideshow, you will see some cases that basically have the same lenses as regular cameras. If the “larger sensors” are such a factor as well as lenses, I see no reason why they can’t include them in such cases as well, if they haven’t already.

  28. CarlB:

    Okay, at least 4x larger…
    http://www.dpreview.com/news/2012/10/16/Sandor-Barna-explains-how-1-inch-sensors-will-save-the-compact-camera

    So the sensor and lense are in the case to work with the iPhone (probably already in one or more of the examples I’ve shown). You basically already have a casual camera with iPhone, and can upgrade with a lense/sensor case if necessary. Makes sense.

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