Sony Faces Serious Headwinds

Sony Corp. (NYSE: SNE) continues it retreat as most of its business divisions continue to sputter in the face of competition. The company closed a camera and mobile phone factory. It also will "downsize" its headquarters staff. Some 2,000 people will be affected. A layoff that small will not bring Sony back to health or profitability.

Its buyout of the half of the Sony-Ericsson smartphone business it did not own was a mistake. The unit's products run well behind those from Apple Inc. (NASDAQ: AAPL) and Samsung and they struggle in a pack that includes LG, Motorola, HTC and Google Inc. (NASDAQ: GOOG). Sony's camera and television operations cannot recover. Camera sales have been hurt by smartphones that have cameras of their own -- good ones. TVs and screens have become a commodity, and the low-margin manufacturers are in China and Korea, not in Japan where labor costs are fairly high.

Finally, Sony's game operation faces greater and greater competition from rivals Microsoft Corp. (NASDAQ: MSFT) and Nintendo. This is another market in which smartphone products have started to supplant those that run on consoles and handheld gaming devices.

Douglas A. McIntyre

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