U.S. shares are down 6.1% in mid-day trading after Sony took a $1.67B charge for its mobile communications unit. Its mid-range mobile phones struggled to keep up with rival models from Apple and Samsung. As a result, the company says today it will cut back on those models and concentrate on its higher-end ones in “certain geographical areas.” With the writedown, Sony says that it expects the fiscal year that ends in March to record a $371.8M operating loss vs the $1.3B profit it had forecast in July, and a $2.1B net loss vs the previously projected $464.8M loss.
This is the sixth time CEO Kazuo Hirai has lowered Sony’s financial forecast since he took charge in 2012. “We’re going to shift from a strategy of seeking market share and unit scale to prioritizing profitability,” he said, the Financial Times reports. He added that he will slash the mobile phone unit’s 7,100 workforce by 15%.
Sony’s phone woes have been apparent for a long time. In the U.S. it has a relationship with just one carrier — T-Mobile. It’s also lagging with China’s local carriers.
The troubles in mobile phones could add to profit pressures on Sony’s entertainment and video game units. The Japanese electronics giant is preparing to unveil a cable-like video service that will use the Internet to transmit channels to owners of Sony smart devices including its PlayStation game consoles and Bravia TVs. Last week, Viacom became the first major content provider to agree to offer its services on the still-unnamed Sony initiative.