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Friday, January 18, 2013
Sony To Its 550 Madison Avenue Building For $1.1 Billion
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Sony said it has agreed to sell its U.S. headquarters
building in New York City for $1.1 billion to a consortium
led by real estate developer The Chetrit Group.
The sale price is $1.1 billion, and it is expected that
the transaction will close in March 2013. SCA and other
Sony businesses (including Sony Music Entertainment,
Sony/ATV Music Publishing and Sony Pictures Entertainment,
among others) will remain in the building for up to three
years under a leaseback arrangement with the purchaser.
After repaying debt related to the building and other
transaction costs, it is expected that Sony will receive
net cash proceeds of approximately $770 million. Sony
expects to realize a gain on the sale of approximately
$685 million to be recorded as operating income.
Sony is currently reevaluating its forecast of the
consolidated financial results for the current fiscal year
ending March 31, 2013 to take into account this sale and
other factors that might affect such forecast.
The move is part of Sony's initiatives to strengthen its
financial foundation and business competitiveness and for
future growth. At the same time, Sony is balancing cash
inflows and outflows while working to improve its cash
flow by carefully selecting investments, selling assets
and strengthening control of working capital such as
inventory.
Under new Chief Executive Kazuo Hirai, Sony is focusing on
consumer electronics - particularly mobile phones, tablets
and gaming - and shedding non-core assets, as it seeks to
regain ground against rivals like Samsung and bounce back
from four straight years of net losses.
The company has also put one of its main buildings in
central Tokyo up for sale in a deal that could raise as
much as 100 billion yen ($1.14 billion), Reuters had
reported earlier.
Sony's CEO Kazuo Hirai believes that his company is headed in the right direction although its comeback is not yet complete.
Speaking at reporters in Tokyo, Hirai stressed he is making a point of personal involvement in product development to make sure good ideas don't get squelched.
Sony is taking a beating from Chinese, Taiwan and South Korean rivals that offer products at much cheaper prices. Hirai said Sony will target customers willing to pay more and won't get sucked into a price war.
Sony reports earnings next month for last year's final quarter. The numbers are expected to highlight a Sony midway through its recovery. |
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