The Strategist

Falling DVD market makes Sony write off nearly a billion dollars of goodwill


01/30/2017 - 14:31



Japanese Sony Corp. announced write-off of 112.1 billion yen ($ 976 million) in the cinema segment for the quarter ended in December, as newly popular online broadcasts sharply limited demand for DVD.



Jamie McCall
Jamie McCall
The announcement followed decline in the company’s profit forecast on DVD operations, blue-ray and other types of home entertainment with the overall shrinking market, reports Reuters.

The main part of goodwill to be canceled was originally recorded in 1989 in connection with acquisition of movie maker Columbia Pictures Entertainment. Sony was forced to significantly reduce its earnings forecast on sales of movies on a DVD-ROM and other products for home entertainment due to a general weakening of the market.

Sony said that it is continuing to assess potential impact of write-downs and selling its share in M3 on the financial performance. The company will present its profit forecast for the current fiscal year on 2 February, after announcement of the Q3 results.

Sony aims to revive its movie business. In November, Financial Director of the Japanese conglomerate Kenichiro Yoshida told that the pivot "is in progress, but realization of advantages takes time."

Previously, Sony expected that the image sensors would be the main source of profit in the coming years. Yet, manufacturers of expensive smart phones, including Apple, are cutting demand for them, which, in turn, appears to have a negative impact on profits.

Now, the Japanese company is betting on VR helmets and robotics. Sony has announced an investment in technologies associated with artificial intelligence, and development of a robot, which potentially will be able to build emotional relationships with people.

After a number of difficult years, Sony has successfully restrained overall losses associated with production of televisions and other consumer electronics, said Financial Times. Earlier in June last year, it became known that remuneration of the corporation’s President and CEO Kazuo Hirai amounted to almost five million - a record for the company.

In January, the company informed that Michael Lynton, Head Sony’s global entertainment business, will retire in February. In addition, in a recent statement, Sony warned that it would cut its share in healthcare online service M3 Inc. up to 34% from 39.3% in an attempt to improve financial situation.

The company expects that sale of shares will bring about 37 billion yen in operating profit in the IV quarter of the financial year ending 31 March.

source: reuters.com




More
< >

Monday, October 23rd 2017 - 15:47 WSJ: Tesla to built a plant in China

Friday, October 20th 2017 - 11:41 Oberthur Fiduciaire growing in Europe