Seoul, Korea—Sony will sell its nearly 50% share in an LCD joint venture with Samsung Electronics to the South Korean company for $940 million, “as it struggles to reduce huge losses at its TV business,” reported Reuters.
The joint venture, formed seven years ago, “cut its capital by 15% 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,” according to Reuters.
Sony, the third largest flat-panel TV maker, had earlier warned of a fourth straight year of net losses, with its TV unit alone expected to lose $2.2 billion. According to Reuters, Sony announced “it would review its earnings forecast to reflect 66 billion yen in impairment losses from the transaction, as well as expected future cost savings.”
Originally established to secure supplies for Sony’s flat-screen TVs at a time of shortages, the venture with Samsung, S-LCD, has not proved financially sound for Sony. Sony projects that dissolving the joint venture will save the company Y50bn a year, although it noted that the non-cash impairment loss had not been factored into its earlier forecasts for the fiscal year to March. Sony currently has four TV plants—in Japan, Brazil, China and Malaysia.