Sony (NYSE:SNE) put in new management three years ago to reverse the decline of its businesses, especially its flagging video game operation. It brought in the first non-Japanese CEO, Howard Stringer.
With the PS3 launch there was some hope that Sony had found its way back to being the premier consumer electronics company in the world. The product sold poorly, some believe because it was priced too high. Sony's TV business also started to fall apart as the prices for video screens began a sharp drop.
Now, Sony will post the largest loss in its history and lay off a number of employees.According to Reuters, "Japan's Sony, maker of Bravia flat TVs, Cyber-shot digital cameras and PlayStation game machines, said it would post a bigger-than-expected $2.9 billion operating loss this business year due to sliding demand, a stronger yen and as it restructures its ailing electronics operations."
It may not be as simple as that. Sony has made the same decision that GE (NYSE:GE) has, which is to stay in a number of unrelated businesses. Sony runs a movie studio along with a camera business and a financial arm along with a TV operation. Its game consoles have little in common with any of these operations.
Investors are doing GE stock to multi-year lows. Its CEO, Jeff Immelt, may suffer from the same problem that Stringer does. He has wanted to hang on to too many businesses for too long. Getting senior management's time to focus on any one of them for an extending period is impossible.
Investor pressure could not get Sony and GE to sell units. The bite of the recession will.
Douglas A. McIntyre is an editor at 247wallst.com.
Closing Bell: Can't go up every day (BAC, HE, HPW, COMS, BRCD, WMT, AMD)
Wal-Mart grows profit and cash flow in Q3, but comps still ailing
Chasing Value: Ten stocks for 2010 -- Part 2
Reader Comments (Page 1 of 1)
1-22-2009 @ 11:23AM
Iridium said...
Howard Stringer is a complete moron. He came from the Sony pictures wing of the company after leaving CBS. He wants to turn Sony into a media company rather than focus on consumer hardware.
The downturn of Sony rests squarely at his feet and he is responsible. If Sony doesn't throw him out right now they will go out of business.
Sony is a hardware company and needs to stay in that business. They need to refocus on making the best consumer electronics products and redo their marketing plan.
The PS3 marketing campaign was awful. Something I would expect to get green lit by Stringer. For some reason people think that these high powered CEOs are geniuses. They are in fact morons, they are equal to politicians who can't see the solution to a problem when it is staring them in the face.
1-22-2009 @ 12:02PM
Sean Kelley said...
Isn't a little late to sell units? Who would buy them? Who would finance it? If they did sell, you would critisize them for getting too low a price.
No, these companies will keep what they have becasue they are stuck with them in this economy.
I love how people have such short term memories. The game divison was making money hand over fist and carrying a lot of SONY before the PS3 came out.
And what pray tell is GE's core business? Aplliances and light bulbs they have been manufacturing for 100 years? GE Money which was bringing in 60% of GE's revenue not long ago.