Sony’s failing mobile business is costing the company billions

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Sony’s mobile unit is heading for trouble, after the electronics giant cut the unit’s outlook amid falling smartphone sales. Chief executive Kazuo Hirai announced on Tuesday a massive impairment charge of about $1.7 billion. But he said Sony remains committed to the business, keeping it as one of three core Sony divisions, despite slow market growth. In its full year forecast ending March 31, the Japanese giant widened its net loss to $2.15 billion from $466.3 million. The company will not issue a dividend for the first time since it listed in 1958, according to Reuters, quoting Hirai.

Sony’s envisioned comeback in the mobile business has hit a snag. A big snag. The Japanese electronics conglomerate warned Wednesday that it will post a loss of 230 billion yen ($2.1 billion) in its fiscal year that ends March 31, 2015. It also suspended its dividend — the first time it won’t be making a payout since it listed on the Tokyo Stock Exchange in 1958. The company blamed the “competitive environment of the mobile business.” Sony has been hammered by competition and an inability to find distributors in key markets such as the US. While its line of high-end Xperia smartphones have been praised for their design and waterproof bodies, they continue to fall under the shadow of giants Apple and Samsung. Sony’s problems underscore the hyper-competitive environment that smartphone makers face — with similar struggles facing HTC and others. Sony said the losses are a result of a writedown of 180 billion yen ($1.67 billion) in its mobile business and will result in the overall company’s fifth annual loss in six years. It also marks a rough year for CEO Kazuo Hirai, who took the reins in 2012 with a vow of turning the business around. Sony plans to change its mobile strategy by concentrating its efforts in “certain geographical areas, premium lineups and reducing the number of models in its mid-range lineup,” the company said in a statement (PDF).

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