Sony Corp hopes to increase operating profit 25-fold within three years by growing its camera sensors and PlayStation units, its chief executive said, laying out a strategy that could see the company exit the ultra competitive TV and smartphone markets.
CEO Kazuo Hirai said on Wednesday the Japanese consumer electronics firm would no longer pursue sales growth in areas such as smartphones where its has suffered competition from cheaper Asian rivals as well as industry leaders like Apple Inc and Samsung Electronics.
Sony would instead focus its spending on more profitable businesses such as camera sensors, videogames and entertainment as it seeks to return to growth after forecasting for this financial year its sixth net loss in seven years.
“The strategy starting from the next business year will be about generating profit and investing for growth,” Hirai told a briefing, adding that Sony’s units would be given greater autonomy to make their own business decisions.
Asked about the TV and mobile phone units, Hirai said he would not “rule out considering an exit strategy”, Sony’s clearest statement to date about the possibility of selling or finding partners for these struggling units.
Sony is in the midst of a restructuring that has so far seen it sell off its personal computer division and spin off the TV business. It has also axed thousands of jobs.
Sony shares have risen more than 80 percent over the past year as investors applauded the restructuring, which accelerated since Hirai appointed Kenichiro Yoshida as his chief strategy officer in late 2013.
Blizzard is happy and why shouldn’t they be as World of Warcraft subscriptions are up. The reason for the increase can be traced to the release of the latest expansion pack which was recently released. The latest WOW expansion pack is called Warlords of Draeno and its release has driven subscriptions to 10 million.
Selling over 3.3 million copies of the Warlords of Draenor on the first day alone, growth has been seen in all major territories since release. The numbers do include those players that are using the 1 month free subscription that comes with the expansion pack. WoW subscriptions had climbed to 7.4 million last quarter after being down.
Of course the release of Warlords of Draenor has not been without its problems. Still Blizzard says that they are working around the clock to address them. Owners have been offered free play time as compensation.
Samsung Electronics Co Ltd said that it will discontinue its light emitting diode (LED) lighting business outside of South Korea, scaling back what was identified as a key growth business just four years ago.
The pullback comes on the heels of Dutch rival Philips recent decision to spin off its century-old lighting business. Price wars have slashed profitability to levels deemed too unattractive in the long run, despite an LED boom that has upended the global incandescent lighting industry.
Analysts say Samsung Electronics’ retreat reflects the growing competition from Chinese manufacturers even as demand for LED lighting remains strong. LED lamps last 10 times longer than fluorescent bulbs and 100 times longer than traditional incandescent tungsten filament bulbs.
“It appears that Samsung decided to fold the business because price competition was so fierce and there was not a lot of room for growth going forward,” said Seoul-based IM Investment analyst Lee Min-hee.
Philips said in September that it will spin off its lighting business to expand its higher-margin healthcare and consumer divisions. Two month earlier, Germany’s Osram Licht AG, which also makes LED lights, announced a cost-cutting plan that included nearly 8,000 job cuts.
A spokeswoman at Samsung Electronics said revenue contribution from the business was small but did not comment on specifics, including how much Samsung had invested.
“We will remain active in the LED industry through our LED component business,” Samsung Electronics said in an emailed statement, adding that it will focus on areas such as backlighting for displays of consumer products like televisions.
“We have been building our team on assumptions of faster growth than have materialized. As a result, we announced today that we plan to simplify our organization … we also need to consider possible employee reductions,” Chief Executive Mikael Hed said in a statement.
According to Rovio, the Angry Birds game, in which players use a slingshot to attack pigs who steal birds’ eggs, is the No. 1 paid mobile application of all time.
Rovio has expanded the brand into an animated TV series and merchandising of toys and clothing, but at the same time it has struggled to retain players, resulting to its earnings halving last year.
In August, the company named Pekka Rantala, a former Nokia executive, as its next CEO.
Microsoft Corp is said to be planning its biggest round of job cuts in five years as the software giant moves to integrate Nokia Oyj’s handset unit, Bloomberg reported, citing people with knowledge of the company’s plans.
The reductions, expected to be announced as soon as this week, could be in the Nokia unit and the parts of Microsoft that overlap with that business, as well as in marketing and engineering, Bloomberg reported.
Since absorbing the handset business of Nokia this spring, Microsoft has 127,000 employees, far more than rivals Apple Inc and Google Inc. Wall Street is expecting Chief Executive Satya Nadella to make some cuts, which would represent Microsoft’s first major layoffs since 2009.
The restructuring may end up being the biggest in Microsoft history, topping the 5,800 jobs cut in 2009, the report said.
Some of the job cuts will be in marketing departments for businesses such as the global Xbox team, and among software testers, while other job cuts may result from changes Nadella is making to the engineering organization, Bloomberg reported.
Last week, Nadella circulated a memo to employees promising to “flatten the organization and develop leaner business processes” but deferred any comment on widely expected job cuts at the software company.
Nadella said he would address detailed organizational and financial issues for the company’s new financial year, which started at the beginning of this month, when Microsoft reports quarterly results on July 22.
HP plans to axe more than 1,100 jobs at three of its UK sites in 2014, the Unite union announced on Wednesday.
The 1,124 job cuts will take place across three of HP’s UK workplaces, in Bracknell, Sheffield and Warrington. A total of 618 jobs could be lost at the Bracknell hub, 483 will go at Warrington, and 23 at Sheffield.
However, Unite said that many of these job cuts will affect HP employees who work from home, although we’re not sure that makes the situtation better.
Unite national officer Ian Tonks said, “For the last five years HP has been addicted to a culture of job cuts in the UK to such an extent that its highly skilled workforce has little faith in the way the company is being managed and will be going forward.
“Unite will be doing everything possible to mitigate these job losses which are a hammer blow to the UK’s IT sector and very distressing for employees in the run-up to Christmas.”
The reason for the job cuts is still not entirely clear. HP cited “reorganisation” and “falling demand”, despite being one of the only PC makers in the third quarter to show sales growth, while rivals Acer and Asus posted massive declines in PC shipments.
Tonks continued to condemn the job cuts, adding, “At the recent re-negotiation of the European works council (EWC), senior European managers were unable to answer any questions about the future EWC, as they could not get hold of their American bosses because of last week’s Thanksgiving holiday. It’s no wonder there is so little faith in the European management.”
HP has yet to announce when the job cuts will commence, but reports claim they will begin in early 2014.
A HP spokesperson said in a statement, “HP commenced consultation for Q1 FY14 on November 28th, 2013 in the UK regarding potential workforce changes for 2014.
“The proposed UK workforce management plan is part of HP’s global multi-year productivity initiative that was announced on May 23, 2012, and updated at its Securities Analysts Meeting on October 9, 2013, to address current market and business pressures in support of HP’s turnaround in EMEA.
“HP remains committed to supporting the employability of its employees through a number of internal initiatives, including re-skilling, redeployment and support to obtain alternative employment as appropriate.”
The move is meant to “streamline and optimize” the company’s U.S. organization “after several years of aggressive growth,” HTC said in a Monday email. A company spokeswoman declined to specify how many employees would be affected.
“However, to achieve our long-term goals as a business and return maximum value to our shareholders, this is a necessary step to drive ongoing innovation,” the company said.
HTC has been facing a difficult year on weak earnings that have sent its stock price tumbling. In the second quarter, its net profit plummeted 83 percent year-over-year, despite strong reviews for its flagship smartphone, the HTC One.
The weak financials are major change from only a couple years ago when HTC was riding high selling Android smartphones in the U.S. But starting in late 2011, the company’s net profit has sagged on increased competition from Samsung and Apple.
To recover, HTC has focused on building up its “One” smartphone brand. In addition, the company has expanded its China presence, and in August launched a new marketing campaign that’s enlisted Hollywood actor Robert Downey Jr.
While the company has largely focused selling high-end handsets, in July HTC said it was planning on selling more mid-tier and entry level phones to regain market share. The new phones will launch at end of the third quarter or early fourth quarter.
But the company’s troubles go beyond issues with smartphone sales and marketing. In September, Taiwanese authorities arrested three HTC employees for allegedly stealing company secrets. One of the employees arrested was Thomas Chien, HTC’s vice president of product design.
HTC has declined to offer further details on the case.
The layoffs are part of rolling job cuts that have been ongoing for several weeks, the people told the paper.
“I can confirm a small number of employees were laid off today,” a company spokesman told the newspaper, without providing additional details.
BlackBerry, which has bled market share to rivals including Apple’s iPhone and phones using Google’s Android technology, said last month it was weighing its options, which could include an outright sale.
News of the layoffs was first reported by Canadian technology blog Cantech Letter.
BlackBerry could not immediately be reached for comment outside of regular U.S.business hours.
IBM’s CEO Virginia Rometty has taken to her web cam to blast her be-suited staff who are “too slow.” Rometty sent off a five-minute internal video message which was so grumpy they did her the favour of sending it to the Wall Street Journal. She moaned at the company’s sales staff for failing to get ink on the page for a number of potential deals.
“As the quarter ended, hundreds of millions of dollars of software and mainframe opportunities, they didn’t close and that was because we didn’t move fast enough,” she snarled.
Rometty said that in at least one case IBM was too slow to understand the value and then engage on the approval and the sign-off process and it didn’t get done. If a client were to have any requests or questions in the future, IBM had better have a response ready within a day.
“And if anything slows you down, call it out. Engage management, engage leadership and let’s deal with it,” she growled. She has already given her “under-performing” storage crew a dressing down and said she will be taking “substantial actions” to sort out that area of its business and Rometty has also switched the head of corporate strategy with the head of systems and technology in a bid to shake things up.
But on the plus side, she confessed that her strategy was “the right one” and “fundamentals are strong”. So in other words she is right and those lazy suits are wrong. Big Blue missed its first quarter targets after expected income from mainframe systems and related software deals, along with patent licences, had to be rolled over into the second quarter.
IBM, a bellwether for the IT industry, is in the midst of a drive to boost profits by 2015 against an uncertain global economic backdrop.
Local management has yet to officially outline whether there will be a formal job-cuts plan approved by U.S. headquarters, the union representatives said, but said the numbers had already been communicated.
“Management is set to present a plan to cut between 1,200 and 1,400 staff over the next two years,” said Pierry Poquet, secretary general of the UNSA union, who said a meeting was planned for April 25.
“For now it is only a target…we’ve heard such announcements before but they don’t always come to pass.”
The CFE-CGC union’s representative, Evelyne Heurtaux, confirmed the figures. “We’ve been told a figure of around 1,300 jobs cut over two years,” she said.
IBM currently employs around 8,000 people in France, Heurtaux said.
An IBM spokeswoman could not be reached for comment.
AMD is about to face a cash crunch just as the outfit needs the dosh to push into new markets.
According to Bloomberg AMD is facing yet another crisis. Not only is Chief Executive Officer Rory Read firing workers to cut expenses as the chipmaker’s sales slide, he can’t cut costs fast enough and is seeing his cash reserves shrink faster than an Arctic swimmer’s scrotum. AMD’s cash supply has fell to $1.5 billion in the third quarter, shedding $279 million from the previous period. If this goes on the company might only have $600 million in the bank by this time next year. AMD has $2.04 billion of debt.
No one has ever worried about AMD’s cash flow before, but now there are some serious concerns. Particularly as the PC market, which provides 85 percent of AMD’s sales, has been drying up because of the economic melt down.
Fears are that AMD might run out of money before any transformation to the new technology landscape can happen.
PC chip maker Advanced Micro Devices announced that it will cut its workforce by 15 percent in a bid to reduce operating expenses, its second round of layoffs in less than a year as it struggles with a weak global economy and a consumer shift toward tablets.
The chip maker, with a staff of nearly 12,000, said in a statement it expects its restructuring actions, which will also include site consolidations, to result in operational savings of $190 million next year. It expects to record a restructuring expense in the fourth quarter of about $80 million.
“It’ll bring earnings up, I guess, but you still have to ask how disruptive this will be and what roles are they cutting,” said Stacy Rasgon, an analyst at Bernstein Research. “The market is not going their way and they’re not in a strong position.”
Last week, AMD warned that its third-quarter revenue fell more than previously expected and that gross margins suffered from a $100 million writedown due to lower future growth of some products.
New Chief Executive Rory Read took over at AMD last year promising to fix long-standing execution problems that have plagued the chip maker. But since he took over, AMD has continued to lose money as well as market share to Intel and graphic chip rival Nvidia.
Tablets and smartphones, once considered a niche market by Intel and others, are fast gaining favor with consumers and eating into sales of laptops and desktop computers, while a slowing global economy is dampening spending in general.
Struggling mobile phone giant Nokia will sell some 500 wireless patents to U.S. firm Vringo and divest its Qt software business to Finnish IT services firm Digia Oyj to prop up its dwindling cash reserves.
Nokia is fighting for survival after losing the smartphone war in which Apple and Samsung have gained dominance. The world’s second-largest cellphone maker has linked up with Microsoft to sell phones using Windows software but has so far had only limited success.
To halt losses Nokia unveiled a massive restructuring program in June, including cutting 10,000 jobs and said it plans to divest non-core assets.
The patent deal nets Nokia $22 million, while still leaving it with one of the strongest portfolios in the wireless industry.
Vringo said it will pay cash for the patents, which cover a broad range of technologies relating to cellular infrastructure. Should the patents yield more than $22 million in revenues, Nokia will collect a further payment of 35 percent of income.
The value of the deal in which Nokia will divest Qt software to Digia was not disclosed, but analysts estimated it was a fraction of the $150 million Nokia paid for Qt’s then-owner Norway’s Trolltech in 2008.
Qt software was a central part of Nokia’s strategy until 2011 when it decided to swap its own smartphone software for Microsoft’s Windows Phone.
The software is used by more than 450,000 developers for making applications for some 70 industries, including automotive, medical, industrial automation and defense.
Valve ‘boss’ Gabe Newell caused quite a stir this week when he remarked during a talk at Casual Connect in Seattle that Microsoft’s Windows 8 is “kind of a catastrophe for everybody in the PC space.” Some are saying that Windows 8 is the next “Vista” and that it’s not too friendly for consumers or developers. Recently, Rob Pardo, executive vice president of game design at Blizzard, took to Twitter to endorse Newell’s comment.
Pardo commented on the “nice” interview that former Xbox executive Ed Fries did with Newell, and he then proceeded to note that Windows 8 is “not awesome for Blizzard either.”
The big concern from Newell and others is that Microsoft will make Windows 8 a closed system. It’s been suggested that Microsoft will seek more control over various applications and purchases made through Windows 8, but the company has yet to announce full details.
Apparently HP CEO Meg Whitman has had the challenging task of going on a charm offensive. She has told Autonomy staff they have a bright future with HP.
The company bought Autonomy for more than $11 billion as part of a daft move by the then CEO Leo Apothiker to turn HP into SAP. However Autonomy did rather badly last quarter and was to blame for a disappointing performance of HP’s software division.
Whitman said in an email that it was “always hard when a charismatic founder, who has built a great company leaves.” But she added that Autonomy staff had a “very bright future” aft HP. She stressed that Lynch’s departure was down to the division’s poor performance rather than the notion that Autonomy had no place in HP’s corporate culture.
Already one in five Automony people think that the the writing is on the wall and have cleaned out their desk and moved on to greener pastures. Lynch will be replaced by HP’s chief strategy officer Bill Veghte.
World on the street is that perhaps things had not gone so well at integrating Automony and Lynch took the fall for it. HP had not done well with its software, not just around Autonomy but in other sides of its software suite as well.
The problem is that HP does things one way while Autonomy did them another. Interestingly enoguh, Autonomy never fell short on its sales targets until it was bought by HP.