SONY TV - this business is not getting any easier!

See the article below on the Sony TV business. Customers are not chasing after features that they feel do not add value to the set. Chip producers have convinced TV makers to shove more features in than a customer wants in a TV. At the end of the day it is about the content, and being able to sit back, relax, and watch a good show or get the news. Until the customer clearly calls for a PC on their main TV of the home SMART TV - Internet TV will fail. Building it and they will come will not work anymore. The economy has all consumers looking at every dollar and considering what they are or are not willing to spend.

Sony Prepares TV Overhaul After 3-D, Google Sets Fail to Revive Earnings

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By Mariko Yasu - Aug 2, 2011 12:42 AM PT

• Sony Plans TV Overhaul

  
  Tomohiro Ohsumi/Bloomberg

  A model wearing 3D glasses stands next to Sony Corp.'s 3D Bravia televisions at their unveiling in Tokyo.

A model wearing 3D glasses stands next to Sony Corp.'s 3D Bravia televisions at their unveiling in Tokyo. Photographer: Tomohiro Ohsumi/Bloomberg

Sony Costing Shareholders 70% Gain by Clinging to TV

Tomohiro Ohsumi/Bloomberg

During the past six years, Sony Corp. has lost market share to Suwon, South Korea-based Samsung and Apple Inc. of Cupertino, California, as it struggled to win customers by betting demand for online content and 3-D technology would revive TV sales.

During the past six years, Sony Corp. has lost market share to Suwon, South Korea-based Samsung and Apple Inc. of Cupertino, California, as it struggled to win customers by betting demand for online content and 3-D technology would revive TV sales. Photographer: Tomohiro Ohsumi/Bloomberg

Sony Corp. (6758), facing an eighth straight year of losses from its main television operations, is preparing to overhaul the business to reduce costs and compete against Samsung Electronics Co.
The plans may include partnerships as well as reorganizing the procurement, product development and sales operations, Mami Imada, a Tokyo-based spokeswoman, said in response to queries about a Nikkei newspaper report. Details of the reorganization may be decided this month, she said.
Chairman Howard Stringer, who’s farmed out production to Foxconn Technology Group and eliminated thousands of jobs, may be returning his focus toward cost cuts after 3-D TVs and Internet-centered sets failed to stem Sony’s slide in market share against Samsung and LG. The Japanese company last week replaced its TV head and said it won’t sell as many units as it had anticipated.
“Sony needs to make deeper changes in the structure of its TV business,” said Kota Ezawa, a Tokyo-based analyst at Citigroup Inc. “Selling its factories can only be the first step.”
Sony closed 0.7 percent higher at 1,973 yen in Tokyo trading today, narrowing its loss this year to 33 percent. That compares with the 3.8 percent decline by Japan’s benchmark Nikkei 225 Stock Average.
The Nikkei newspaper reported earlier today Sony will outline plans for its TV operations, citing Chief Financial Officer Masaru Kato.

Back-to-Back-to-Back Losses

The maker of Bravia TVs cut its sales and profit estimates last week, citing sluggish sales of TVs in the U.S. and Europe. Tokyo-based Sony, reeling from three consecutive years of companywide losses, also slashed its full-year TV sales target by 19 percent to 22 million units.
Sony also announced at the time that Yoshihisa Ishida, president of the home-entertainment unit that makes TVs, will be replaced by Masashi Imamura, president of the personal imaging group that produces cameras. Ishida will become a deputy CEO at Sony Ericsson Mobile Communications AB.
In the past two years, Sony has sold three factories, reducing its number of TV plants worldwide to four, as part of the company’s efforts to reduce costs.
Sony agreed last year to sell 90 percent of a TV factory in Nitra, Slovakia, to Foxconn’s Hon Hai Precision Industry Co., after disposing of 90 percent of its largest North American TV-making assets to Taipei-based Hon Hai. Sony also agreed to sell a TV facility in Barcelona in September.

Dwindling Brand

Edmund Ding, spokesman for Hon Hai, didn’t answer calls to his mobile and office phones.
Once worth more than $100 billion, Sony has lost half its market value since Stringer became its first non-Japanese chief executive officer in 2005. The company that invented the Trinitron cathode-ray tube TV in the 1960s is now valued at about $25 billion, less than a quarter the size of Samsung.
Sony may no longer rely on its brand for an edge. Since Samsung passed Sony in terms of brand value in 2005, the Korean company has extended its lead, ranking 19th in Interbrand’s latest annual survey of global brands, or 15 places above Sony.
Clinging to the television business may be costing shareholders. While analysts say Sony shares may climb as sales of its PlayStation game consoles and Cyber-shot digital cameras bolster profit this year, stripping out losses at the TV business from the rest of the company would boost its equity to $43 billion, according to data compiled by Bloomberg.

Biggest Division

By selling the TV division, Sony would exit a business that is forecast to lose almost a billion dollars this year as consumers unwilling to pay for its Bravia flat-screen TVs turn to cheaper brands. The TV unit had 1.2 trillion yen ($15.5 billion) in sales last year, making it the biggest source of Sony’s revenue, data compiled by Bloomberg show.
Shiro Kambe, Sony’s chief spokesman in Tokyo, said yesterday the company has never considered walking out from the TV business because of its importance to the company.
The company lagged behind Samsung and Seoul-based LG Electronics Inc. (066570) in the global TV market last year, with 12.4 percent of sales, according to DisplaySearch. Sony’s share slipped to 11.4 percent in the first quarter.
A strengthening yen versus the dollar and euro is also exacerbating Sony’s losses by making its exports less competitive overseas and reducing the yen value of foreign-currency denominated sales.

Google TV

Sony, which began offering Internet-enabled TVs in the U.S. in October that use Google Inc. (GOOG)’s software and also introduced 3-D Bravia models last year, said last week it expects the loss from its TV business to be as large as the 75 billion yen deficit it reported in the fiscal year ended March.
That would push losses at Sony’s TV division past a half-trillion yen since 2004, or more than $5 billion based on historical exchange rates, data compiled by Bloomberg show.
Stringer has already eliminated 30,000 jobs, sold factories and moved production overseas in an effort to revive earnings.
“The reorganization plan should be big enough to surprise the market,” said Keita Wakabayashi, an analyst at Mito Securities Co. “It may not be easy for Sony to come up with something very new to investors after promoting cost reductions.”
To contact the reporter on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net
To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net