After 8 years of non-stop losses, Sony to sell of their stake.
After the original join venture between Sony and Samsung began in 2004, Japan’s biggest consumer electronics exporter has decided to throw in the towel, with the past 8 years of the TV division resulting in continuous losses.
As part of the dissolution of Sony’s share in the S-LCD Corp. venture, Samsung will pay Sony $935 million in cash. From January onwards, Sony will instead have a steady supply of LCD panels from Samsung at market prices; without the need to heavily invest in the manufacture of the panels themselves.
“It’s a step forward for Sony,” said Shiro Mikoshiba, an analyst at Nomura Holdings Inc. in Tokyo to Business Week. “Canceling out the venture enables Sony to become more flexible in procuring panels. Still, Sony continues to face falling prices and heavy fixed costs.”
Sony may have been the third largest TV panel retailer in 2010, but with only a 12% global market share, trailing behind Samsung as the largest, and LG as the second largest TV manufacturer.
For their fourth quarter earnings, Sony has predicted their fourth consecutive year of loss. However, CEO Howard Stringer did say that the $8.4 billion of acquisitions this year will help improve their position in the smartphones and tablets market.