) is preparing to sell off its Vaio personal computer (PC)
business to a private investment fund company, Japan Industrial
Partners, according to a report published in The Nikkei Asian
Review. Though company personnel were not available for
confirmation, markets are betting big on the news, given the
investors' positive reaction.
Per the report, the under-performing PC business will be sold
for approximately $391 million to $489 million (40 billion yen to
50 billion yen). Sony is likely to retain a minority stake in the
The company has been intending to reform its business for
quite some time as the PC business has remained sluggish. In the
second quarter of 2013, the company revealed that the annual sale
guidance for Vaio had been revised down to 5.8 million units from
the earlier expectations of 6.2 million units for fiscal
The decline in the PC business is due to increasing
competition from countries like China and a shift of consumer
preference from PCs to tablets and smart phones. Moreover, per a
research by Gartner, this trend is likely to grow at an
The sale of this division is thus, a part of Sony's strategy
to transform itself and relocate its assets towards more
lucrative Mobile, Game and Digital Imaging businesses.
The business is expected to fall under a new unit of Japan
Industrial Partners that will continue to manufacture Vaio PCs.
Apart from producing; the unit will also be responsible for the
aftermarket sales service. Sony might consider closing out the
business in overseas markets to have undivided focus on the home
Besides some employees, most of Vaio's staff will become a
part of Japan Industrial Partners. The development and production
of the PCs are likely to continue at Sony's existing Research and
Development (R&D) site- Nagano Prefecture.
The sale of the PC business is likely to have a negative
impact on Sony's earnings for the year ending on Mar 31,
2014. The company had expected yearly profit of $29.1
million (30 billion yen) previously, which after this deal, would
amount to significant net loss for the company in the current
However, the market reacted positively to the speculated news
and the company's stocks soared up 5.57% in yesterday's trading
With this news on the table, we are waiting for the release of
the company's fiscal third-quarter 2013 results tomorrow, on Feb
Sony currently holds a Zacks Rank #4 (Sell). Other
better-ranked stocks in the industry worth considering include
Logitech International SA
Harman International Industries, Inc.
), both carrying a Zacks Rank #1 (Strong Buy) and
) carrying a Zacks Rank #2 (Buy).
HARMAN INTL IND (HAR): Free Stock Analysis
LOGITECH INTL (LOGI): Free Stock Analysis
SKULLCANDY INC (SKUL): Free Stock Analysis
SONY CORP ADR (SNE): Free Stock Analysis
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