* Sony in talks to sell Vaio Japan business to fund -source
* Analysts estimate could lose 30 bln yen on PCs this year
* CEO Hirai could ramp up restructuring from now -analyst
By Reiji Murai and Sophie Knight
TOKYO, Feb 5 Sony Corp's plans to quit
making personal computers after years of losses focus a
spotlight on how it intends to fix a much bigger problem - a
flagship TV division that has lost $7.5 billion over the last 10
The pullout comes as Japan's electronics firms look for
daylight beyond the shadow of industry giants like Apple Inc
(AAPL.O> and Samsung Electronics Co. Exiting the
Vaio PC business Sony founded 17 years ago will mark the first
time Chief Executive Officer Kazuo Hirai pulls a major consumer
Still unclear is when Sony can catch up with local peers
Panasonic Corp and Sharp Corp on the
restructuring track. The pair have swallowed charges, sold off
or cured many loss-making businesses, and bounced back to strong
Sony is now in talks with Japan Industrial Partners, a
Japanese fund that buys up businesses that are being
restructured, to take over the Vaio brand's operations in Japan,
according to the plan under consideration, a source told Reuters
Financial details and final stakes in the new entity were
still being discussed, the source said. Sony is scheduled to
report earnings for the October-December quarter on Thursday.
The deal will follow the disposal of assets such as its New
York headquarters and a major building in Tokyo last year and
could presage CEO Hirai stepping up restructuring efforts, said
Macquarie Research analyst Damian Thong.
"The only way to fund restructuring was to receive funds in
deals like this one," said Thong, who has an 'outperform' rating
on Sony stock. "And if you look at the last six months, I have
to say that this has been the battle strategy that Kaz Hirai has
Sony said it had not announced anything about its PC
business and that it was exploring various options for the unit.
An official at Japan Industrial Partners declined to comment.
On Wednesday, Sony's shares rose 4.6 percent as investors
welcomed the news on the Vaio sale. But shares in Panasonic
surged 19 percent after it more than tripled third-quarter
Sony doesn't break out details of its PC division's
financial performance. Analysts estimate its operating loss in
the year through March 2014 will be around 30 billion yen.
Dwarfed by industry giants like Lenovo Group Ltd
as well as Apple and Samsung, Sony's share of the PC market
slipped to 1.9 percent in 2013 from 2.3 percent in 2011,
according to research firm Gartner.
The news that Sony is preparing to exit one of its
better-known brands will sharpen interest in the performance of
the company's TV business when it reports earnings on Thursday.
Analysts expect a strong showing by Sony's financial services
and music businesses to help lift operating profit for the
quarter to about 72 billion yen from 46.4 billion yen a year
In the first six months of fiscal 2013, Sony's financial
unit brought home 85.2 billion yen in operating profit. But Sony
logged just 51.1 billion yen in operating profit overall,
revealing deep losses for electronic gadgets such as video
games, audio equipment and TVs.
Citing losses linked to the sale of the PC business, the
Nikkei business daily reported on Wednesday that Sony could slip
into a net loss for the year ending March 31 for the first time
in two years.
Sony's progress has been hampered by its reliance on
consumer electronics. With an array of business-to-business
divisions, Panasonic and Sharp have been able to adjust their
business models and focus on industrial products, like auto
parts, solar panels or energy-efficient housing systems, instead
of consumer goods.
Having last turned an annual operating profit in the 12
months ended March 2004, Sony's TV business has piled up total
operating losses of 761.9 billion yen ($7.5 billion) in the
Like other Sony businesses, Vaio - an acronym for 'Visual
Audio Intelligent Organizer' - has seen its thunder stolen by
Apple gadgets. The Macbook Pro has eaten up much of the consumer
market for sleek, high-end laptops that had become the focus of
the Vaio brand.
The iPad and other tablets as well as smartphones have also
battered consumer demand for PCs overall. Worldwide PC shipments
are forecast to total 278 million units in 2014, down 7 percent
from 2013, according to research firm Gartner.
Sony has based its fightback on smartphones, PlayStation
games, and imaging sensors for mobile devices as well as digital
cameras. But analysts have mixed views on their long-term
prospects, and many have been frustrated by the slow pace of
progress in other businesses.
"One thing is clear, electronics remains a bleeding
Achilles' heel," said Atul Goyal, an analyst at Jefferies in
Singapore who has a 'hold' rating on the stock. "Sony continues
to struggle without an exit strategy from electronics."