On its way to a 2014 loss of $1.2 billion on $75 billion in revenue, Sony lost money in it mobile products, game, PC, home entertainment and devices divisions. Sony Pictures made $501 million on $8.1 billion in revenue. Interestingly enough, Sony’s only highly profitable operation is its financial services division, which made $1.7 billion on $9.6 billion.
Sony’s new forecast for fiscal 2015 is that the company will lose $490 million, much of it due to restructuring of its PC operation. Most business school professors advise that companies that lose money year after year need to focus on fewer businesses. This probably applies even more so to Sony because it does almost everything poorly.
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It has been more than a year since Daniel Loeb, a raider who became one of Sony’s shareholders, tried to force a spin-off of entertainment assets. He was blocked by Sony CEO Kazuo Hirai. Looking back, Hirai may wish that he had gone along with Loeb and improved Sony’s balance sheet by selling something worthwhile, in addition to dumping PC and handset assets.
Sony’s studio businesses are probably worth $10 billion, if a review of Time Warner Inc.’s (NYSE: TWX) and Viacom Inc.’s (NASDAQ: VIAB) books and market valuations are any indication. And one can assume that each of these companies, and others that prize entertainment assets, would be bidders for Sony’s entertainment operations.
Hirai has one financial chance to do something right — selling a valuable business that is unrelated to any of his others.
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