Sony Exits LCD Joint Venture with Samsung for $940 Million

Sony, which recently announced that it may post a $1.2 billion loss in FY2011, has exited its LCD joint venture with Samsung which was established in 2004. Samsung will acquire Sony’s 50% stake in the S-LCD corporation for approximately $940 million. Sony has also entered into a new agreement with Samsung, to secure LCD panels from it at market prices.

With this move, Sony aims to streamline its business and reduce costs, in a bid to become lean and profitable again. It will also get a much needed cash infusion thanks to the sale of its S-LCD stake.

The new arrangement will be beneficial for Samsung too, as it now has greater flexibility, efficiency, and control over its LCD panel production business. The deal is expected to be closed by January 2012, barring any regulatory delays.

Sony desperately needs to restructure its business, in order to become the giant it once was. It has been posting losses for many quarters, and has been hit hard by the strong yen and the weak television sales in Europe and the U.S. It has also lost a significant amount of market share to competitors like Samsung. This move will lead to savings of $640 million every year, according to Sony.

It recently acquired Ericsson’s 50% stake in the Sony Ericsson partnership, to focus on the more lucrative mobile phone business.

Published by