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Sony Sells Tokyo Offices for $1.2 Billion in Turnaround Plan

Sony Corp. (6758) sold a building in Tokyo for 111.1 billion yen ($1.2 billion), its third major asset sale this year, as the company strives to avoid a fifth straight annual loss.

The world’s No. 3 TV maker will book a 41 billion-yen gain this quarter from selling the building in Shinagawa ward, according to a statement today. The company will lease the offices from the new owners, a group led by Nippon Building Fund Inc. (8951)

Sony agreed earlier this year to sell New York offices and a stake in a medical-data company as Chief Executive Officer Kazuo Hirai turns to asset sales to help meet a goal of posting 20 billion yen of net income in the year ending March 31. The Tokyo-based company’s TV and mobile phone-making operations are losing money because of competition from Samsung Electronics Co. and Apple Inc.

“This isn’t about the company’s core business and is only a one-time profit gain,” Keita Wakabayashi, an analyst at Mito Securities Co. in Tokyo, said by phone today. “This won’t likely change investors’ views.”

Asset Sales

Sony last month agreed to sell its 37-story New York headquarters to Chetrit Group for $1.1 billion. The company expects a profit of about $685 million from the deal. The electronics maker also predicted a 115 billion-yen gain following the sale of a stake in M3 Inc. (2413) The largely paper gain mainly derives from a revaluation of Sony’s remaining stake in the health-care data provider.

Hirai also agreed to sell a chemical unit and stakes in display-making ventures as he sharpens Sony’s focus on mobile devices, games and digital imaging. The company reiterated its full-year profit forecast of 20 billion yen earlier this month. The target included expected gains from asset sales.

“Sony has identified certain assets for possible sale as part of an initiative to transform its business portfolio and reorganize its assets,” the company said in a statement today. “This sale was conducted as part of that initiative.”

Sony is currently evaluating the impact of the Tokyo office sale and other factors on its earnings forecasts, it said today. The company made a similar statement last week after the M3 deal.

Xperia Sales

The electronics maker rose 3.6 percent to close at 1,338 yen in Tokyo trading before the announcement. The benchmark Nikkei 225 Stock Average gained 2.7 percent. Sony has climbed 40 percent this year, buoyed by a weaker yen that’s boosting earnings from overseas.

The manufacturer is heading for a ninth straight annual loss at its TV-making unit amid slowing demand and rising competition. Sales of Xperia smartphones and tablets are also trailing Apple’s iPhones and iPads.

The company’s credit rating was cut three levels to BB-, a non-investment grade, by Fitch Ratings in November. Slumping demand for TVs and weakened economic conditions at home and overseas will leave the company maker struggling to regain technological leadership, Fitch said at the time.

Sony raised 150 billion yen selling five-year convertible bonds in November, its first offering of similar securities since 2003. The inventor of the Walkman, which is cutting 10,000 jobs, lost about 31 percent of its market value last year.

To contact the reporter on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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