Sony Corp. Chief Executive Kazuo Hirai's comeback plan, dubbed One Sony, is starting to look more like Several Sonys.
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The Japanese electronics and entertainment company said Wednesday that it would spin off its video and sound segment into a separate wholly owned subsidiary, following a similar move last year for its long-troubled television business. The goal is to get them more focused on profits while the Sony parent looks for growth in businesses such as movies, music, videogames and image sensors, said Mr. Hirai.
After years of losses, Sony now aims to lift operating profit to Yen500 billion ($4.2 billion) in three years. It expects to eke out an operating profit in the year ending in March, with the TV business turning to the black for the first time in a decade.
Mr. Hirai said Wednesday that he envisioned spinoffs of other units. He also said the company would consider a sale of the TV unit or the company's struggling smartphone business, though he said nothing was currently in the works.
"I think we have to keep those possibilities in mind," he said.
Mr. Hirai said making units more autonomous would spur managers to focus on profitability and make it easier to pursue business alliances.
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Under the new structure, "each business unit will be more flexible and speedy in making business decisions and will be asked to be more responsible for what they do," said Atsushi Osanai, an associate professor at Waseda Business School in Tokyo who used to work at Sony. "A challenge for Mr. Hirai is to make sure these spun-off segments remain coherent as one Sony group."
Mr. Hirai introduced the slogan One Sony in 2012 as a way to draw together the company's disparate holdings, which range from electronics to entertainment to financial services. A year later Mr. Hirai rebuffed a proposal by the New York hedge fund Third Point LLC for a partial spinoff of Sony's entertainment businesses, which the firm said would unlock value that was obscured by the travails of Sony's electronics arm.
Mr. Hirai said Wednesday that Sony wasn't giving up on the One Sony approach. Under the new structure, Mr. Hirai, "there will be a good balance between centrifugal and centripetal forces."
Sony has sharpened its focus on profitability since Mr. Hirai named a new chief financial officer, Kenichiro Yoshida, last year. While Sony expects to post a net loss for the year ending March 31, it recently upgraded the outlook for its operating results, forecasting a profit of Yen20 billion instead of a loss of Yen40 billion. Since Mr. Yoshida took his job last April, Sony shares have risen 58%.
The company has spun off its personal-computer unit and recently said it would pull the plug on its in-house music streaming business. In its place, Spotify AB will provide digital music for Sony devices.
Mr. Hirai, in a briefing on the company's midterm strategy, focused more on profitability goals than grand visions of Sony's future. The company, he said, wants to achieve a 10% return on equity, a broad measure of profitability, up from minus 7.4% for the year ending March 31.
Rather than pursuing sales volume, Mr. Hirai said, Sony will focus on growth in profitable areas such as the PlayStation game business and the image sensor unit, which makes cameras for Apple Inc. and other smartphone providers. It sees growing demand for the sensors in cars because of the spread of autonomous driving technology.
Sony also sees its music division and its movie unit as growth drivers, even though the latter is still recovering from a cyberattack. Mr. Hirai said the company would consider acquisitions of entertainment assets in places such as India.
In addition to a split-off of the video and sound units, which Sony said would take place by Oct. 1, the company said it was organizing its businesses into three categories according to their growth prospects, with content, games and image sensors at the top and smartphones and TVs at the bottom.
The hierarchical arrangement is a "good step," said Yasuo Nakane, an analyst at Deutsche Bank, "though the question would be how much it will actually spend on image sensors and PlayStation, and how much it will not invest in smartphones and TVs to make sure they will be profitable."