Sony agrees to sell PC business, revises forecast to loss

Sony plans to sell it Vaio PC operations to an investment fund, cut 5,000 jobs, and revises full-year forecast from a profit to a loss of $1.1 billion. It will also spin off its TV business.

Vaio Pro: Sony has agreed to sell its Vaio laptop business to a Japan investment fund.
Vaio Pro: Sony has agreed to sell its Vaio laptop business to a Japan investment fund. Sony

Sony has reached an agreement to sell its Vaio laptop business to an investment fund and spin off its TV business.

The Japanese electronics giant had been in talks with investment fund Japan Industrial Partners, according to earlier reports. That deal is now official, according to Sony.

Sony "has determined that concentrating its mobile product lineup on smartphones and tablets and transferring its PC business to a new company established by [Japan Industrial Partners] is the optimal solution," Sony said.

Sony, which plans to cut about 5,000 jobs as part of the sale, also revised its full year forecast to a loss of 110 billion yen ($1.1 billion) from a profit of 30 billion yen.

And the TV operations will be spun off into a separate unit.

"Sony has decided to split out the TV business and operate it as a wholly-owned subsidiary. The targeted timeframe for this transition is July 2014," the company said in a statement.

Here is the full Sony statement on the sale of its laptop business.

Following a comprehensive analysis of factors, including the drastic changes in the global PC industry, Sony's overall business portfolio and strategy, the need for continued support of Sony's valued VAIO customers, and future employment opportunities for personnel involved in the VAIO business, the Company has determined that concentrating its mobile product lineup on smartphones and tablets and transferring its PC business to a new company established by JIP is the optimal solution. Sony and JIP will now proceed with due diligence and negotiate detailed terms and conditions of the business transfer, targeting the conclusion of a definitive agreement by the end of March 2014. Following reevaluation of the product lineup, the new company is expected initially to concentrate on sales of consumer and corporate PCs in the Japanese market and seek to optimize its sales channels and scale of operations, while evaluating possible further geographic expansion.

As a part of the business transfer to JIP, Sony will cease planning, design and development of PC products. Manufacturing and sales will also be discontinued after the Spring 2014 lineup to be launched globally. Even after Sony withdraws from the PC market, Sony customers will continue to receive aftercare customer services. Approximately 250 to 300 Sony Corporation and Sony EMCS Corporation employees involved in PC operations, including planning, design, development, manufacturing and sales, are expected to be hired by the new company established by JIP. Sony will also explore opportunities for other employees to be transferred to other businesses within the Sony Group. For employees of Sony Corporation and Sony EMCS Corporation that are not hired by the new company or transferred within the Sony Group, Sony plans to also offer an early retirement support program to assist their reemployment outside of the Sony Group.

The company's money-losing PC business has a staff of about 1,000.

Sony established the Vaio brand in 1996 when Microsoft and Windows 95 ruled the world. At Sony's peak, it shipped close to 9 million units a year. In 2013, it's expected to ship fewer than 6 million units, according to IDC estimates.

This is happening against a backdrop of a shrinking PC market. Global PC shipments fell 10 percent in 2013, returning to 2009 levels, marking the worst decline ever, market researcher Gartner said in January.

Sony wouldn't be the first Japanese player to bow out of the PC business. NEC, once Japan's top domestic PC brand, handed over control of its PC business to Lenovo in 2011.

And even China-based Lenovo, which is vying with Hewlett-Packard to be the No. 1 global PC maker, is putting increasing emphasis on smartphones these days, evidenced by its planned purchase of Motorola's handset business.

Earlier speculation that Sony was in talks with Lenovo were inaccurate, Sony claims.

Correction: Sony shipments are in millions not hundreds of thousands.

About the author

Brooke Crothers writes about mobile computer systems, including laptops, tablets, smartphones: how they define the computing experience and the hardware that makes them tick. He has served as an editor at large at CNET News and a contributing reporter to The New York Times' Bits and Technology sections. His interest in things small began when living in Tokyo in a very small apartment for a very long time.

 

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