Sony Corp announced on Oct. 31, Monday, that it is selling its loss-making battery business to Mutata Manufacturing Co. At the same time, the Japanese tech titan has cut its profit forecast for 2016 fiscal year.
Sony's decision to cut profit forecast has come as a disappointment, which has been hoping for an upward revision on buoyant sales momentum for PlayStation 4 and the launch of its virtual reality headset. Even the Japanese conglomerate had hoped sales of the PS4 as well as the release of PlayStation VR headset would contribute to a healthy fiscal year for the company.
The sale of its battery unit for about $166 million is seen as a reversal for the company. Especially after the company resisted the efforts of the Japanese government to develop Sony as a national champ in batteries capable of competing with the Korean companies like LG Chem and Samsung SDI, the Financial Times reported.
Nevertheless, the sale is said to be a step towards Sony's long-term plan. Sony now plans to streamline the company focusing on video games, entertainment and its camera sensors that are used in several best selling smartphones in the market today.
On the other hand, the acquisition is a part of Murata's strategy to expand its business into the healthcare, business and energy sectors. Murata is also based in Japan and is currently the largest supply of energy-storing capacitors globally. The company's capacitors are used in Apple and Samsung smartphones.
The sale of the battery unit to Murata had been announced in July this year. Apparently, the impact on the company's earnings will be better than expected. Now, the Japanese tech titan expects to announce a profit of $2.6 billion at the end of its current financial year in March 2017, Reuters reported.
However, the profits will be around $300 million less than what was estimated in July this year. The overall profit margin will be 8 percent less compared to the previous year.
Sony now expects to post 270 billion yen ($2.6 billion) in operating profit for the year ending in March, down 30 billion yen from its previous forecast made in July and an 8 percent decline from the previous year.
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