Sony Writes Off $1.5B From Its Mobile Division As It Cuts Smartphone Sales Target Again

Sony replaced the head of its mobile division yesterday, and today its latest earnings report gave a clearer indication of why. Sony’s mobile unit increased its revenue in the last quarter (its fiscal Q2 2014) by 1.2 percent to $2.83 billion, but the company wrote down the valuation of the business by a whopping $1.59 billion.

That line item contributed to a $1.58 billion loss for Sony Mobile Communications, which weighed down the corporate company’s financial performance. Overall, Sony Group reported a loss of $785 million despite notching a 7.2 percent increase in company-wide revenue, which came in at $17.45 billion.

There were bright points in other parts of the Japanese giant’s business. Sony’s gaming unit saw its revenue jump 83 percent person year-on-year thanks to the introduction of the PlayStation 4; while its devices business — which sells semiconductors and camera lenses to smartphone makers — reported revenue of $271 million, a 187 percent increase on a year previous.

Sony didn’t feature in analyst firm IDC’s top five ranking based on smartphone shipments, and that doesn’t look like changing soon after it cut its forecast for shipments in the next quarter. The company said it will not reach the previously expected 43 million shipments due to “an expected decrease in the annual unit sales of smartphones mainly in China,” while it has struggled in the U.S. market.

The Verge reports that it now expects to sell 41 million smartphones in the next quarter; that’s some way short of the initial 50 million target set at the start of Sony’s financial year.

With Lenovo continuing to blossom — and now in control of Motorola — LG hitting record shipments, and Xiaomi ranking a highest-ever third worldwide, there are plenty of examples of Android phone makers succeeding despite the problems Samsung is facing. Perhaps with an eye on the rebirth of its rivals, Sony decided it is time for a change and yesterday replaced its mobile business lead, Kunimasa Suzuki, with Hiroki Totoki, an executive who led its corporate planning, finance and new business division.