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Sony Keen to Switch Off Television Deal With Samsung: Report
October 30, 2011

A report says Sony wants to sell its S-LCD stake to Samsung this year. A report says Sony wants to sell its S-LCD stake to Samsung this year.
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Tokyo. Sony, struggling with a loss-making television business, is in negotiations to pull out of its LCD joint venture with South Korea’s Samsung Electronics in a bid to cut costs, the Nikkei business daily reported on Sunday.

The Japanese electronics and entertainment giant is aiming to reach an agreement by the end of this year to sell its nearly 50 percent stake in liquid-crystal display joint venture S-LCD to Samsung, the paper said.

Sony plans to rely more on outsourcing to reduce procurement costs, trying to cope with rapidly falling prices of LCD panels due to a global oversupply, the Nikkei said without citing sources. Spokesmen for both companies declined to comment.

South Korean newspaper Chosun Ilbo had a similar report on the joint venture breakup in July, which Sony denied.

A well-informed industry source said in Seoul that such reports seem to be “distorted,” since Sony has been negotiating with Samsung regarding its return on investment in the joint venture, rather than shareholdings.

“Under the contract on the LCD joint venture, the two parties are allowed to discuss such matters, which outsiders could misunderstand as a step for Sony to withdraw from the joint venture,” said the source, who spoke on condition of anonymity.

In April, both companies cut capital in the joint venture by $555 million as Sony tried to slash its TV losses and Samsung pushed ahead with next generation displays.

Sony is under pressure to reduce exposure to the loss-making TV unit and concentrate on its smartphone strategy. Last week, it said it would take control of its mobile phone joint venture with Ericsson as it tries catch smartphone leaders such as Apple.

Sony reports July-September results on Wednesday. Analysts are forecasting the company will fall short of its operating profit outlook of 200 billion yen ($2.63 billion) for the year to March 2012, with consumer confidence wobbling in Europe and the United States and as the strong yen bites into profits.

The electronics giant, which competes with Samsung and LG Electronics in televisions, needs to cut costs as it heads for its eighth straight annual loss in its TV business. Sony has already sold off TV factories in Spain, Slovakia and Mexico in the past few years, and it outsources more than half of production to companies such as Hon Hai Precision Industry.

It retains four TV plants of its own in Japan, Brazil, China and Malaysia.

Reuters