Sony kills off its funky Vaio chicken

Sony has announced that it is quitting the computer business and is splitting its TV division into a separate unit as it warned it expects steep losses this year.

It is also ordering the loss of 5,000 jobs in a bid to trim $988 million a year from fixed costs in the longer term. Losses in the TV business have long dogged its efforts to do better in other areas.

Sony’s core mobile and home entertainment businesses also fell short of its expectations, and Sony said it now forecasts a net loss of $1.1 billion in the fiscal year ending in March. It previously expected a smallish net profit.

The job cuts, which will come in both TV and PC divisions, are to be implemented by March 2015. The cost savings are to kick in by the 2015-2016 financial year, Sony said.

The Vaio PC division, as widely expected, will be sold to investment fund Japan Industrial Partners, which will set up a separate company to take over the operations. The TV operations will be spun off into a separate unit by July 2014, Sony said.

Having last turned an annual operating profit in the year ended March 2004, Sony’s TV business piled up losses of $7.5 billion in the nine fiscal years before the current one. Sony officials said the business will keep losing money.

But Sony’s problems have been around for more than the current year. In fact the outfit has appeared to have been suffering from self-delusion for years. Even before the PC industry tanked, there were those of us who were wondering what Sony was playing at. For example for years people wondered why Sony was, allowing its Playstation console to be priced well above that of its rivals Nintendo and Microsoft.

In the case of Microsoft, it was even peddling a machine which was not any better than the Xbox for a much higher price. Yet for some reason officials at Sony thought that it was better and people would buy ait nyway. Of course, it was wrong, but that arrogance did not go away for years. Now the latest results and restructuring indicate that many of Sony’s chickens have come home to roost.