Sony Considering Sale Of Newly Minted Tokyo Building for $1.5 Billion [REPORT]

Plans to lease back building in effort to cut costs.

 @YannickLeJacq
on January 10 2013 10:35 AM

In the midst of its many high-profile announcements this week at the Consumer Electronics Show (CES) in Las Vegas, Sony (NYSE: SNE) is facing new problems closer to home.

The struggling Japanese tech giant is reportedly sizing up one of its major offices in Tokyo for sale, according to the Wall Street Journal. The company is hoping to make between ¥100 billion ($1.14 billion) and ¥130 billion to reverse a years-long trend of heavy losses and weak sales in its core consumer electronics businesses.

Much like its rival smartphone manufacturer Nokia (NYSE: NOK), which recently sold its Espoo headquarters to fellow Finnish company Exilion for €170 million ($223.46 million) only to lease the property back, Sony is not planning to relocate after the sale. Instead, the company is simply trying to cut costs as it continues to jettison nonessential assets and refocus around the core product lines detailed by CEO Kazuo Hirai’s “One Sony” vision.

The Sony City Osaki building is barely 2 years old, first being completed in 2011 to house over 5,000 employees working research and development for television, audio and Sony’s consumer electronics divisions.

Sony has already cut out many loss leaders in its business under Hirai’s leadership since he first took over in April 2012. The company reported massive layoffs in late August following a first quarter loss. Since then, it has announced plans to close one of its lens factories, sold its entire chemical products business, and is searching for buyers for its battery unit -- a sale that could give the company another ¥58.46 billion.

Despite the constant effort to trim its assets down to size, Hirai said this week that he would never consider selling Sony’s entertainment or finance businesses, simply telling the Wall Street Journal, "I love their business," and, "they're not for sale."

At CES 2013 this week, the company revealed its plan to focus on turning its mobile unit into a viable third pillar of the smartphone industry alongside Apple (Nasdaq: AAPL) and Samsung (LON: BC94), a turnaround it hopes to kickoff with its new flagship Xperia Z.

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