It's probably time for Sony to put out a "For Sale" sign on its devices business.
In just six months, the unit -- which includes the division that makes camera components, called modules -- has gone from hero to dunce.
Back in October, Sony expected devices to deliver 121 billion yen ($1.1 billion) in operating profit for the year that ended March 31, second only to financial services. That would have given it an operating margin of 11.4 percent, a more than respectable figure in a very tough global hardware market.
In January, Sony cut that figure to 39 billion yen, with the margin shrinking to 4.1 percent. Falling demand for mobile products -- smartphones and tablets -- was hurting sales of both sensors and modules, it said at the time, with operating income further hit by a writedown of assets in the battery business.
Thursday brought another writedown. In a surprise announcement, Sony cut a further 59.6 billion yen from the value of the devices unit, citing camera modules as the culprit, wiping a net 30 billion yen from full-year operating income:
"Due to a decrease in projected future demand, Sony has revised its Mid-Range Plan for the camera module business in the Devices segment from the period beginning with the fiscal year ending March 31, 2017."
How the star performer morphed into one of Sony's biggest drags can't be fully explained by external factors. For sure, the global mobile market is slowing, but smartphones are still posting growth, especially at the high end, as consumers are prepared to pay more for quality components such as cameras. Declines in the PC and digital still camera markets can't account for the sudden reversal in fortunes, either: That's been a theme for a few years.
That leaves internal factors. If this truly is a macro problem, then the sudden writedown bears a whiff of incompetence. If, on the other hand, Sony lost a key client, that says something about its ability to retain big customers, or its dependence on too few.
Either way, the fact that Sony let this star burn out suggests that the company, and its shareholders, would be better off selling parts or all of the devices unit to managers who could realize its potential.
The latest write-off will slim the unit's book value down to a size more palatable to any acquirer, and still leave room for Sony to book a profit from a sale.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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