Sony to sell 50% stake in LCD joint venture to Samsung

December 26, 2011 - 11:49 AMT

PanARMENIAN.Net - Sony Corp has agreed to sell its nearly 50 percent stake in an LCD joint venture with Samsung Electronics to Samsung for $940 million, the Korean firm said on Monday, Dec 26, as Sony struggles to staunch red ink at its TV business.

The venture cut its capital by 15 percent in July and industry sources had said Sony was negotiating an exit, aiming to switch to cheaper outsourcing for flat screens for its TVs while Samsung pushes ahead with next-generation displays.

Sony warned in November of a fourth straight year of losses for the financial year to next March, with its TV unit alone set to lose $2.2 billion on tumbling demand and a surging yen.

The maker of Bravia TVs and PlayStation game consoles said at the time it would revamp its LCD panel procurement but did not comment on the outlook for the LCD venture with Samsung.

"In terms of direction it is positive," said Keita Wakabayashi, an analyst at Mito Securities in Tokyo. "But if they are making a loss on the sale, one could ask why they didn't make this decision sooner."

Some analysts say the $100 billion LCD TV market peaked last year and forecast it will shrink 3 to 4 percent annually, as consumers in advanced countries have already traded in their bulky cathode-ray tube TV sets for flat screens, while the LCD market has been in a glut since last summer.

Sony said in April it would not raise its stake in a separate LCD venture with Sharp Corp for at least a year, and in October signaled a stepped-up push into the smart phone market by announcing it would take control of its mobile phone joint venture with Ericsson for $1.5 billion.

The company is hoping to exploit its music and video applications to help it catch up with smartphone leaders such as Apple Inc.

Sony said on Monday it would report a 66 billion yen ($856 million) impairment loss for the October-December quarter but expected to cut 50 billion yen in annual costs in the LCD business by ending the venture with Samsung, Reuters reported.