Facing a projected net loss for the fiscal year of about $1.1 billion, Sony is enacting a restructuring plan to reverse the fortunes of the company.

Sony CEO Kaz Hirai announced yesterday that the company is selling their Vaio computer division, spinning the TV division into its own wholly-owned subsidiary and eliminating 5,000 jobs worldwide.

According to the Financial Post, the TV division of Sony has accounted for losses of $7.8 billion over the last decade. While Sony isn’t currently planning to completely sell off the TV unit, they may do so if the opportunity arises in the future. For now, the plan for Sony TV (or whatever it may eventually be called after restructuring) is to focus on cornering high-end HD and 4K markets.

The Vaio PC division is going to be sold to investment fund Japan Industrial Partners which will take over operations of Vaio under a newly setup company. Terms of the deal have yet to be disclosed though Sony says they will retain a 5% ownership share in the new company.

The job cuts will be completed by March 2015 with the full impact of cost savings to be realized by the fiscal year ending March 31, 2016. Of those 5,000 layoffs, 1,500 will be in Japan with the remaining 3,500 outside of Japan.

In aggregate, Sony believes that the total savings from these moves will be about $970 million (¥100 billion).

As part of the restructuring, Sony is looking to focus on what Hirai referred to as the three pillars of their electronics division – gaming, mobile and imaging.

The Xperia smartphone and tablets group at Sony also had a sales projection decrease of 2 million smartphone units. Sony also noted a relative inability to break into the American market due to a lack of contracts with major service providers.

At least things are looking good for Sony on the gaming front. They previously announced that 4.2 million PS4 consoles were sold through December 28th which means that they’re on track to beat the 5 million unit sold guidance for FY 2014. However, Sony says that recovering development costs of the console may take up to two years.

While Sony is taking steps to secure its future, we have to play a bit of wait and see as to how much this restructuring will improve the company’s financial performance. While Sony is focusing on areas it believes are high growth in gaming, smartphones and tablets, they’re only a major player in gaming. We’ll have to see if the Xperia brand can pull its weight on the bottom line.

Source: Financial Post