Samsung seems to have gained some serious ground in the LCD TV race today by making a large and potentially lucrative purchase from Sony. While there is no word on how many offers Sony received for acquisition of its majority share in the S-LCD company, we do know that Samsung paid a pretty penny of around 940 Million USD (Or 1.08 Trillion South Korean Won) in order to win the bid.
This means that Samsung will receive over 50 percent of the S-LCD shares, making it the majority company in control of the TV manufacturing operation. This venture now gives Samsung access to Sony’s S-LCD screens, which can legally be put into and manipulated for Samsung brand LCD televisions. The addition does not mean that Sony will lose all control of S-LCD’s, as the company stated that it will still be actively using some of its S-LCD’s in its own branded television sets.
The news of this sale should come as no surprise to anyone that has been following Sony Corp’s television division woes. The company has been struggling to profit from the LCD TV branch of its operations and has reported a profit loss for the last eight years in a row.
The deal has not yet been completely closed and is not expected to until the end of January 2012. Prior to that time, Sony said it will be taking a “one-time charge” valued at approximately 845 Million USD (66 Billion Yen) after it re-evaluated the value of its shares in S-LCD. The one-time charge will also cover some of the exchange rates associated between the two companies. While this does not mean that Sony is bowing out of the LCD TV race, it does suggest that they may be downsizing their television production branches by a considerable amount. In fact, Sony has said that they expect to see over 640 Million USD (50 Billion Yen) in savings each year by cutting the S-LCD production from their portfolio.
Is this a good move for Sony? Probably, if they are seeing substantial loss each year from their LCD TV sales. Sony dabbles in many other consumer electronics and has a massive part in the video game industry that will generate more than enough money to soundly keep the company afloat. Pair that with the fact that other LCD dedicated companies (like Samsung and even LG with their newest OLED technology) are making large strides, this may be the best option for Sony to avoid unnecessary expenses.
How do you feel about Samsung’s purchase of S-LCD? Does it make them a more threatening force in the LCD industry? Let us know in the comments below!