Is medical tech the answer for Sony?
Sony may be well known for its TVs and PlayStations, but the company has taken a hit as of late, experiencing what Bloomberg terms "unprecedented losses." But Kazuo Hirai, who is slated to become the company's CEO in April, has a plan: turning to image sensors and complementary metal-oxide semiconductors (CMOS) to make a bigger impact on the medical device market.
The Japanese company recently reported its third-quarter 2011 financial results, and consolidated sales were ¥1.82 billion (roughly $23.4 million), a decrease of 17.4% compared with a year earlier. Sony cited the floods in Thailand, deteriorating market conditions in developed countries and unfavorable foreign exchange rates as reasons for the decline. But the company's declines aren't a recent development, and it has confirmed that it must make "painful" cuts in the face this new reality. "Pain can come in many ways," Hirai recently told reporters. "We have to make some hard decisions on where there are redundancies and reduce the fixed costs in a variety of different areas."
One area that won't be experiencing cuts is CMOS. In fact, the company will spend ¥140 billion to boost its production of CMOS. The technology allows for sharper images in dark conditions, such as those inside a patient's colon or esophagus. The tech has given the company a leg up over other competitors in this space. "Sony is way ahead of its rivals," says Barclays' Yuji Fujimori, who believes the chip unit could eventually be the company's most profitable division. "It's got good margin, too."
And Sony just might be at the right place at the right time. Estimated global sales of CMOS chips for medical and scientific equipment could grow at an annual compound rate of 21% between 2010 and 2015, IC Insights' Rob Lineback said in an email to Bloomberg.
But don't look for Sony to stop there. Company vet Hiroshi Yoshioka has been tapped to take Sony into the medical imaging business and head up the group's innovation center to scout out new business opportunities, Hirai says, as quoted by Reuters.
Sony has made acquisitions to bolster its medical business. Last fall, the company agreed to buy Redmond, WA-based Micronics for an undisclosed amount to accelerate its own R&D. Micronics, which was founded in 1996, makes devices for disease diagnosis. In addition, it is reportedly eyeing an investment in Olympus, the largest endoscope maker in the world, according to Bloomberg.
Sony buys Micronics to enter new field