Sony mulls selling Vaio PC unit
Sony has been reported to be under negotiation with regard to selling its Vaio PC business to an investment fund called Japan Industrial Partners. This is amid the persistent decline of the PC market resulting from the rise of mobile, and Sony, stuck with a range of legacy products, struggles to find its market advantage. According to Nikkei, the amount of the transaction could be up to $490 million.
The potential deal under discussion, reportedly, would create a new company established by the fund that would own the business, and Sony would have a small stake in that company. According to Nikkei, the sale of the business would lead to disposal losses that could put Sony in a position of net loss for the first time in two years.
Sony, earlier this week, denied reports that it plans to sell Vaio to Chinese OEM Lenovo. The Japanese company, however, also acknowledged that it plans to revise its strategy for Vaio by looking at various options.
Jim McGregor, founder and principal analyst for Tirias Research, told us that there are a whole host of reasons for Sony to sell Vaio. He noted: The PC market is shrinking; the margins are razor thin; Sony's PC brand image has slipped in recent years; Sony is not a leader in the market; [and] like other high-tech companies that have fallen from market leadership, Sony needs to retrench and focus on the products and markets that it can become a dominant player [in].
McGregor made it clear that Sony no longer has any reasons to hold on to the PC business. He continued: The PC is no longer the magnet platform for new technology on applications. When it was, it was worth being in PCs just to be working with the latest technology. The magnet platforms are now in mobile and servers. The best option is to sell the group to another PC vendor and hopefully minimize the expenses of doing so. I'm sure that there are a few Chinese or other Asian vendors that may be interested in acquiring Sony's PC group.
McGregor identified the investment fund possibly looking to purchase the business as a "Japanese private equity firm that obviously sees some value in the group if they can get it for the right price."
Craig Stice, senior principal analyst at HIS, agreed that behind Sony's dilemma there is the overall PC market's slump.
"The entire market has been down for the last year and a half or so due to the rise and popularity of media tablets," he said. Noting that Sony has never had a huge market share, Stice pegged the Japanese company's market share at steady the low single digits. "1.9 percent worldwide to be exact," he said. That is fairly low compared to HP, Dell or Asus, he added.
Noting that Sony previously made comments that they are in the restructuring stage for its VAIO PC division, this is "not a huge surprise," he said.
Unlike McGregor, Stice believes that there are a few reasons why Sony should be holding on to Vaio. "Their brand and their legacy of PCs have been around for a while," he said. "They do well in Japan. They do have a name for themselves. They are one of the few vendors out there that has a complete lineup of electronic devices from TVs to cameras to PCs... People know Sony, they understand it."
Stice speculated that Sony might still try to keep a piece of Vaio even after selling most of it to the investment fund. Sony may be in talks with Lenovo for that purpose, he said.
Sony's sales and operating revenue in 2Q13 were $18,117 million, an increase of 10.6 percent, compared to the same quarter a year ago. Sony's operating income in the last quarter decreased to $151 million.
- Zewde Yeraswork
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