Sony cuts 5,000 jobs, exits PC business, tips $1b loss

Sony on Thursday warned it would book a $1.08 billion annual loss and cut 5,000 jobs while exiting the stagnant PC market this year as the once-mighty electronics giant struggles to reinvent itself in the digital age.

The shock news comes a week after Moody's downgraded the firm's credit rating to junk, saying the maker of Bravia televisions and the PlayStation games console had more work to do in repairing its battered balance sheet.

It also comes as Japan's embattled electronics sector faces serious challenges from foreign rivals such as US giant Apple and South Korea's Samsung.

Sony said the job cuts would save about $1.0 billion a year starting from early 2015 as it announced the sale of its Vaio-brand PC division to a Japanese investment fund.

It did not disclose financial details of the deal with Japan Industrial Partners (JIP). but local media reported that the sale was worth between 40 billion yen ($400 million) and 50 billion yen.

Citing "drastic changes" in the global personal computer market, Sony said it had decided to concentrate on "its mobile product lineup on smartphones and tablets and to transfer its PC business to a new company established by JIP that will enable (its) continuation."

The job losses - about 1,500 in Japan and 3,500 overseas - were tied to its ailing television and PC businesses, it said.

Several hundred Vaio employees are expected to be rehired by its new owner and Sony said it will "explore opportunities for other employees to be transferred to other businesses within the Sony Group."

The Japanese firm, a small player in the global PC market, has pinpointed digital imaging, videogames and mobile as the core units that it hopes will lead a turnaround in its electronics business.

Sony Chief Kazuo Hirai has shrugged off pleas to abandon the television unit. The firm last year turned down a call from US hedge fund boss Daniel Loeb to spin off 20 percent of its entertainment arm to boost profits.

Hirai's efforts to turn the firm around got a boost in the year to March 2013 after it posted a small net profit after four years in the red. However, that was largely due to a weak yen and the selling off of assets, including its Manhattan office building for more than $1.0 billion, as part of the wider restructuring.

Sony warned it would not achieve its goal of making the low-margin TV business profitable for the current fiscal year to March, in which it expects to lose 110 billion yen.