Sony to sell chemical unit amid overhaul

TOKYO: Japanese electronics and entertainment giant Sony said Thursday it was selling its chemical products division to the Development Bank of Japan (DBJ) as part of a huge overhaul of its business.

Sony, which has been struggling with giant losses and fierce competition, did not say how much the bank would pay for the unit, which makes a variety of products, including films used in liquid-crystal display (LCD) panels.

A report in the Nikkei business daily Thursday said the bank may pay Sony as much as 40 billion yen ($481 million).

Sony, which said it was aiming to finalise the deal by May and complete the sale in the first quarter of 2013, added that the chemicals arm no longer fit into its wider restructuring plan.

"As a result of such realignment effort, (Sony) believes that this transaction would be the optimum solution for Sony, DBJ and the chemical products businesses themselves," it said in a statement.

Sony added that the bank's "domestic and international networks and other diverse business resources will enable the chemical products businesses to achieve further growth and development in the future."

The unit, which has about 3,000 employees and operations in Japan, the United States, Europe and China, reported sales of 111 billion yen for the year to March 2011.

The sale is the latest move by Sony aimed at restructuring its business

At the end of last year, it extricated itself from a joint LCD-making venture with Korean electronics giant Samsung after about seven years, hoping for greater flexibility in sourcing components.

Sony posted total annual sales of about $87 billion over the same period.

The planned sale comes after credit rating agency Standard & Poor's downgraded the Japanese firm last month, citing its poor earnings, falling demand and fierce competition.

Sony has blamed difficult trading conditions in developed-country markets, the impact of severe flooding in Thailand, and the high yen as among the causes of the plunging numbers.

That followed news the firm was shedding its Welsh-born American chief executive Howard Stringer -- replaced by his 51-year-old protege Kazuo Hirai -- and said it expected to lose a whopping 220 billion yen by March for a fourth consecutive year in the red.

Reports on Thursday said Sony was shaking up its US entertainment business ahead of Stringer's departure, while Hirai would focus on trying to bring its core Japanese electronics division back to profitability.

Stringer's years at the helm of what was once a world-beating company were marked by a series of setbacks.

The firm that made the revolutionary Walkman has lost its edge in recent times, with mobile phones challenging its key games division -- which suffered an embarrassing hacking scandal -- huge losses in the firm's television business, and piracy threatening its music and film assets.

Sony's TV business has been badly hit by rampant competition and minuscule margins, making profits difficult to squeeze out with consumers increasingly unwilling to shell out the sky-high prices that they once did.

The chemical business sale is "not a negative in that the company is making progress for its business restructure but its shares may not benefit much unless it tackles its loss-making TV business," a strategist at a Japanese brokerage told Dow Jones Newswires.

Sony shares were off about 0.7 percent to 1,721 yen in afternoon trade.

Copyright AFP (Agence France-Presse), 2012