Sony Said in Talks to Sell Japan PC Unit to Investor Grou

Sony Corp. (6758) is in talks to sell its Japanese personal-computer business to buyout firm Japan Industrial (3249) Partners Inc., according to a person with knowledge of the situation.

The PC sale is part of a wider restructuring that Sony may announce as soon as tomorrow and could include job cuts, the person said, asking not to be identified before a public announcement. A memorandum of understanding for a sale, which will include the Vaio brand, may be released as early as tomorrow, the person said.

Cutting PCs would bolster Chief Executive Officer Kazuo Hirai’s efforts to improve results in the consumer-electronics group, which is struggling with shrinking demand for key products and a consumer shift to tablet computers. Sony, which reports third-quarter results tomorrow, posted second-quarter losses at the unit making PCs, cameras and televisions.

“There really isn’t a way to improve Sony’s electronics operation if the company keeps going on the path it’s on,” said Takashi Watanabe, a Tokyo-based analyst at Goldman Sachs Group Inc. “A drastic withdrawal or a significant cutback of unprofitable operations can save fixed costs, and that seems to be the only way to go.”

Shares of Sony rose 4.6 percent to 1,600 yen at the close trade in Tokyo, the biggest gain since June 10. The stock has risen 11 percent in the past year, less than half the 24 percent advance in the benchmark Topix index.

Photographer: Kiyoshi Ota/Bloomberg

An attendant demonstrates using a Sony Corp. Vaio Pro Ultrabook laptop computer during a product launch in Tokyo. Close

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Photographer: Kiyoshi Ota/Bloomberg

An attendant demonstrates using a Sony Corp. Vaio Pro Ultrabook laptop computer during a product launch in Tokyo.

Japan Operations

Sony is considering various measures for its PC business, Mami Imada, a spokeswoman, said today by phone. The company on Feb. 3 denied an NHK broadcast report it was discussing creating a venture for the unit with Lenovo Group Ltd. (992)

Sony’s sale plan only includes the Vaio operations in Japan, where the brand has a stronger presence and focuses on selling to business customers, the person familiar with the matter said. The company may close its PC business overseas or sell more assets to Japan Industrial, the person said.

Japan Industrial, founded in 2002, is a private equity firm that buys units of large Japanese companies.

Sony’s PC business could fetch 40 billion yen ($395 million) to 50 billion yen, the Nikkei newspaper reported earlier today.

“Selling the PC operation is positive for Sony in the long term,” said Junya Ayada, a Tokyo-based analyst at Daiwa Securities Group Inc. “The PC is being robbed of the consumer market by tablet computers.”

Industry Slump

PC industry shipments fell 10 percent in 2013, marking the worst year on record, Gartner Inc. said last month.

Unit sales of PCs had a “significant decrease” in the fiscal second quarter, Sony said Oct. 31. Sales of smartphones rose 68 percent, helping the division that includes PCs, phones and tablets narrow its loss to 900 million yen from 23.1 billion yen a year earlier. PC revenue increased 1.5 percent.

On a global basis, Sony’s PC market share stood at 1.9 percent at the end of September, down from a peak of 2.5 percent in 2010, according to tracking firm IDC.

“They have tried to have more lower-priced models, but still play mostly in the high-end space, with average prices higher than most of the top 10 PC vendors in the world,” said Jay Chou, a research analyst for IDC.

Sony owns a PC factory in Japan’s northern Nagano prefecture and uses contract manufacturers in China to make Vaio notebook computers, said Misato Suzuki, a Tokyo-based spokeswoman for the company.

The Vaio sale will cause a full-year loss for Sony, Nikkei reported.

Sony has forecast net income of 30 billion yen for the year ending in March.

To contact the reporters on this story: Cliff Edwards in San Francisco at cedwards28@bloomberg.net; Mariko Yasu in Tokyo at myasu@bloomberg.net

To contact the editors responsible for this story: Michael Tighe at mtighe4@bloomberg.net; Anthony Palazzo at apalazzo@bloomberg.net

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