(Bloomberg) -- Sony Corp. cut its annual profit forecast by 10 percent after taking an impairment on the sale of its battery unit in the latest move by the consumer electronics giant to focus on its most lucrative businesses.
Operating income will be 270 billion yen ($2.6 billion) in the 12 months ending March, down from a projection for 300 billion yen, the Tokyo-based company said Monday. Prior to the release, analysts had expected 307.5 billion yen of earnings this fiscal year, according to the average of estimates compiled by Bloomberg.
Sony agreed to sell its battery unit to Murata Manufacturing Co. for about 17.5 billion yen and also transfer 8,500 workers, resulting in a 33 billion yen impairment for its components business. The company had announced the sale in July without disclosing a price, but warned the deal would likely negatively impact earnings. The charge was less than some analysts expected, with Credit Suisse Group AG predicting a 40 billion yen writedown earlier this year.
“It's very positive because it's one division that has been underperforming,” said Amir Anvarzadeh, Singapore-based head of Japanese equity sales at BGC Partners Inc. “8,500 employees is a lot of employees for a loss making division. And now they've transferred all of them to Murata.”
The affected battery workers represent 6.8 percent of the 125,300 employees Sony had as of March.
Chief Executive Officer Kazuo Hirai has narrowed the scope of operations to focus on businesses that make money. He has relied on games, the largest unit by revenue, to keep investors happy as he deals with the fallout from April's earthquakes in Japan which impacted the production of camera modules.
Shares of Sony rose 1.9 percent to 3,361 yen at the close in Tokyo before the revised forecast was announced. The stock has gained 12 percent this year and is on pace for its fourth straight annual gain.
The company also cut its net income forecast for the year by 25 percent to 60 billion yen, but maintained that sales will total 7.4 trillion yen.
Sony is due to release detailed quarterly earnings Tuesday.
To contact the reporters on this story: Yuji Nakamura in Tokyo at ynakamura56@bloomberg.net, Takashi Amano in Tokyo at tamano6@bloomberg.net. To contact the editors responsible for this story: Robert Fenner at rfenner@bloomberg.net, Edwin Chan
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