Sony has slashed its full-year forecast and has no plans to pay a dividend following a massive 180 billion yen ($1.7bn) impairment charge to the mobile segment. This impairment of goodwill comes as Sony has revised its “Mid-Range Plan” in the mobile segment.
Sony began a review of its mid-range Xperia portfolio at the end of July citing “increasingly competitive markets in various areas.” The new plan for Sony’s mid-range Xperia segment is forecast to deliver much lower cashflows, which is why Sony has impaired the business.
Interestingly, the new strategy in this segment “has been revised to reduce risk and volatility, and to deliver more stable profits.” The outcome is a change of strategy in “certain geographical areas, concentrating on its premium line-up, and reducing the number of models in its mid-range line-up.”
Hindsight is a wonderful thing, but many could foresee the issues that Sony has ended up with. Currently it is not competitive on its mid-range portfolio and recent news regarding the EoL software status for handsets that only arrived last Summer, won’t endear those customers to the Sony brand.
There’s no doubt Sony has a lot of work to do – reducing the number of models and concentrating on those is a good start – but greater transparency over lifetime support is also needed to get the trust back. Thankfully, the premium Xperia segment, hasn’t been mentioned in this writedown, so we assume that everything is on track in this segment.
Thanks Hendra and Max!