OKYO: Samsung Electronics Co, the world's biggest television maker, agreed to buy out the stake of Sony Corp in their joint venture to make liquid-crystal displays used in televisions amid sluggish demand.
Samsung, based in Suwon, South Korea, will pay 1.08 trillion won ($935 million) in cash for Sony's entire stake in S-LCD Corp, a venture formed in 2004 to make TV panels, the company said in a regulatory filing today. Sony will take a charge of about 66 billion yen ($846 million) in the quarter ending December 31 after exiting the venture, the Tokyo-based company said in a separate statement.
The deal comes as Sony, the world's No. 3 TV maker, is streamlining its main TV operation, which is estimated to lose 175 billion yen ($2.2 billion) in the year to March, an eighth consecutive year of losses. Last month, Sony predicted it will post a fourth straight annual loss after the company slashed its TV sales target and the yen reached a postwar high.
"It's a step forward for Sony," said Shiro Mikoshiba, an analyst at Nomura Holdings Inc in Tokyo. "Canceling out the venture enables Sony to become more flexible in procuring panels. Still, Sony continues to face falling prices and heavy fixed costs."
'Substantial savings' Samsung had 50 percent of the venture plus one share of their joint venture, while Sony had 50 per cent minus one share, according to the statement. The two companies have also entered into an agreement for supply and purchase of LCD panels, Samsung said in the statement.
Sony shares gained 1.6 per cent to 1,394 yen at the close of trading in Tokyo today while Samsung fell 0.2 percent to 1.07 million won. The deal was announced after the stock market closed for trading. The Nikkei reported the news earlier today.
The transaction and the subsequent agreement will enable Sony to secure a flexible and steady supply of LCD panels from Samsung, based on market prices, and without the responsibility and costs of operating a manufacturing facility, Japan's biggest consumer-electronics exporter said in its statement.
"Despite this one-time loss, Sony estimates that the transaction will result in substantial savings," starting January, Sony said in the statement.
The Japanese company lagged behind Samsung and Seoul-based LG Electronics Inc in the global TV market last year, with 12 per cent of sales, according to DisplaySearch. In the US, Samsung and Vizio, founded in 2002, had the biggest share for flat-panel televisions, based on research from IHS iSuppli.
Sony reversed an annual profit forecast to project an annual loss of 90 billion yen, its fourth consecutive annual loss.
Samsung, based in Suwon, South Korea, will pay 1.08 trillion won ($935 million) in cash for Sony's entire stake in S-LCD Corp, a venture formed in 2004 to make TV panels, the company said in a regulatory filing today. Sony will take a charge of about 66 billion yen ($846 million) in the quarter ending December 31 after exiting the venture, the Tokyo-based company said in a separate statement.
The deal comes as Sony, the world's No. 3 TV maker, is streamlining its main TV operation, which is estimated to lose 175 billion yen ($2.2 billion) in the year to March, an eighth consecutive year of losses. Last month, Sony predicted it will post a fourth straight annual loss after the company slashed its TV sales target and the yen reached a postwar high.
"It's a step forward for Sony," said Shiro Mikoshiba, an analyst at Nomura Holdings Inc in Tokyo. "Canceling out the venture enables Sony to become more flexible in procuring panels. Still, Sony continues to face falling prices and heavy fixed costs."
'Substantial savings' Samsung had 50 percent of the venture plus one share of their joint venture, while Sony had 50 per cent minus one share, according to the statement. The two companies have also entered into an agreement for supply and purchase of LCD panels, Samsung said in the statement.
Sony shares gained 1.6 per cent to 1,394 yen at the close of trading in Tokyo today while Samsung fell 0.2 percent to 1.07 million won. The deal was announced after the stock market closed for trading. The Nikkei reported the news earlier today.
The transaction and the subsequent agreement will enable Sony to secure a flexible and steady supply of LCD panels from Samsung, based on market prices, and without the responsibility and costs of operating a manufacturing facility, Japan's biggest consumer-electronics exporter said in its statement.
"Despite this one-time loss, Sony estimates that the transaction will result in substantial savings," starting January, Sony said in the statement.
The Japanese company lagged behind Samsung and Seoul-based LG Electronics Inc in the global TV market last year, with 12 per cent of sales, according to DisplaySearch. In the US, Samsung and Vizio, founded in 2002, had the biggest share for flat-panel televisions, based on research from IHS iSuppli.
Sony reversed an annual profit forecast to project an annual loss of 90 billion yen, its fourth consecutive annual loss.
Source: Google news
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