Sony’s TV segment between shut down and salvation

Sony CEO Kazuo Hirai stays committed to the firms flagship TV business despite recent calls for it to be streamlined, he told CNBC at the IFA electronics show in Berlin Wednesday.

His comments follow pressure in recent months from activist investor Daniel Loeb for Sony to sell up to a fifth of the firms entertainment assets. Sony formally rejected the offer in early August, arguing that its movie, TV production and music units were core to its revival strategy.

Hirai promised to make profits at the TV unit by March 2014 after losing 692 billion yen ($8.7 billion) in the past eight years. He cut the number of models and ended a panel- making venture as part of his turnaround plan. Investors say it’s too much effort for too little return.

“Sony would be better off without the TV business,” said for Bloomberg Tetsuro Ii, president of Commons Asset Management Inc. in Tokyo, which owns no Sony shares. Investors, he said, “are hoping the company won’t end up becoming like GM,” and he will only buy its stock when Sony “shows the competitive advantage it used to have over global peers.”

At the IFA electronics show in Berlin, Sony launched its latest smartphone a waterproof Xperia Z1, which has a 5-inch display and a 20.7 megapixel rear-facing camera. According to research firm Gartner, Sony had a 2.2% share of the global mobile market in the second quarter, well below Samsung, Nokia and Apple, which had 24.7%, 14% and 7.3% shares respectively.

Hirai admitted that he still “had a long way to go” in terms of improving Sonys financials, noting weakness in Europe and some other emerging markets. “We have our ups and downs but where were strong… I think were making some good strides,” he added.

Within two weeks of taking the wheel at Sony, Hirai defined his three “core business” priorities: mobile devices, games and digital imaging leaving out the TV business. He foresaw “painful cost cuts” and announced plans to eliminate 10,000 workers, or about 6% of the workforce.

That doesnt mean Hirai plans to close down TVs. Sony and Panasonic announced a partnership in June to develop sets using organic light-emitting diode, or OLED, technology that can be as thin as 4 millimeters (0.16 inches) and produce images 200 times sharper than current LCD models.

“Sony has a very deep DNA in creating the best picture and the best sound,” Hirai, emphasized on Oct. 2 at an industry exhibition near Tokyo.

Sony Corp. advanced almost 0.9% yesterday while 1 year return of its shares add to more than 145%.