Samsung shifts its mobile staff as Sony dawdles
Samsung Electronics is giving Sony a lesson in quick decision-making by moving engineers from its smartphone unit less than a month after posting a profit slump in the business.
Samsung is transferring about 500 workers from mobile phones and allocating them largely to the Internet of Things initiative, according to people familiar with the matter.
Sony CEO Kazuo Hirai on Tuesday told investors about targets for higher entertainment earnings after previously saying the company has been slow to adapt to change.
The move highlights Samsung’s ability to make speedy decisions even in the absence of ailing Chairman Lee Kun-hee, a contrast to Sony’s struggle to revive the phone unit since buying out Ericsson AB’s share in 2012.
The Korean company’s mobile division was responsible for Samsung last month reporting its lowest quarterly profit since 2011.
“Unlike its Japanese peers, at Samsung its chairman’s plans are executed fast,” said Atul Goyal, a Singapore-based analyst at Jefferies Group, on Monday. “Being family-controlled has worked in their favor.”
Operating profit at Samsung’s mobile unit slumped to 1.75 trillion won ($1.6 billion) in the three months ended Sept. 30 from a record 6.7 trillion won a year earlier. Sony’s mobile communications unit lost 172 billion yen ($1.5 billion) during the period, after booking a one-time charge.
“Samsung is a company that is very good at manufacturing, if not at innovation,” Goyal said. “It will fix itself in a few years.”
The company said on Tuesday it’s targeting sales of $10 billion to $11 billion in the motion picture business in the year ending March 31, 2018, with an operating income margin of as much as 8 percent. The music business is projecting sales of as much as $5.2 billion in the same period, Sony said today.
The outlook for its entertainment unit comes less than a month after Sony cut its smartphone sales forecast for a second time, citing poor performance in China. The company will end development of models for the country, CFO Kenichiro Yoshida said at the time. Yoshida will address Sony investors in Tokyo on Nov. 25 when the company holds a separate briefing on its electronics operations.
“I can only conclude that our response to these environmental changes has been neither effective nor nimble enough and that we have been late in enacting decisive change,” Hirai said on May 22, according to a Bloomberg transcript of a conference call.
Four months later, he widened Sony’s loss forecast for the year ending March and said the Tokyo-based company will cut 1,000 jobs in the smartphone business, or 15 percent of the unit’s labor force.
Both Sony and Samsung battle Apple for the high end of the smartphone market, while fending off Chinese manufacturers including Huawei Technologies, Lenovo Group and Xiaomi in the mid-range and low-end market.
Samsung’s Internet push is one of the first major initiatives under Jay Y. Lee, who has taken on more of a leadership role since his father, Chairman Lee, was hospitalized in May. The heir apparent, 46, has to calm investor concerns over the business outlook and his leadership skills.
Samsung responds faster than Sony, Goyal said.
“When they see something working even if a little bit, they will speed up much faster, shift people and resources into it and push very aggressively,” Goyal said.