JAPAN’S SONY Corporation has sold its stake in its venture with Samsung Electronics to make liquid-crystal displays to the South Korean company after predicting an eighth consecutive year of losses from TVs amid sluggish demand.
Samsung will pay 1.08 trillion won (€717 million) in cash for Sony’s stake in S-LCD Corp, a venture formed in 2004, the company based in Suwon, South Korea, said in a statement yesterday.
Sony, which invested 1.65 trillion won in the venture, will take a charge of about 66 billion yen (€648 million) in the quarter ending December 31st after the deal, Japan’s biggest consumer- electronics exporter said.
The stake sale enables Sony chief executive Howard Stringer to shed the responsibility of panel manufacturing amid losses in the TV business, where Samsung is the world’s biggest.
To turn around Sony, which has forecast a fourth consecutive annual loss this year, Mr Stringer has announced $8.4 billion (€6.4 billion) of acquisitions in 2011 to bolster the profitable phones and music divisions, and introduced tablet computers to challenge Apple’s iPad.
“It’s a step forward for Sony,” said Shiro Mikoshiba, an analyst at Nomura Holdings in Tokyo.
Sony shares gained 1.6 per cent to 1,394 yen (€13.70) at the close of trading in Tokyo yesterday, while Samsung fell 0.2 per cent to 1.07 million won (€714).
The deal was announced after the stock market closed for trading.
Sony, the maker of Walkman music players and PlayStation consoles, has declined 52 per cent this year, valuing the company at $18 billion, down from more than $100 billion in September 2000.
Samsung has risen 12 per cent in Seoul this year, and Apple has jumped 25 per cent.
Samsung had 50 per cent of the venture plus one share, while Sony held the remainder. The two companies have also entered into an agreement for supply and purchase of LCD panels, Samsung said.
The transaction and the subsequent agreement will enable Sony to secure a flexible and steady supply of LCD panels from Samsung, based on market prices, and without the responsibility and costs of operating a manufacturing facility.
“Despite this one-time loss, Sony estimates that the transaction will result in substantial savings,” starting January, the company said. – (Bloomberg)
