Sony and Samsung, long-time rivals in the consumer electronics industry, have decided to dissolve the joint venture they had concerning LCD panels. The need to dissolve the venture comes from the financial troubles Sony's been facing for years with its television department. Sony seems inclined to pull back from the television from the market with hopes that it will recover from the blows.
The dissolution will take place as follows: Samsung will buy every share Sony currently holds in the joint venture for a total sum of roughly $935 million, according to Sony Electronics Co.'s statement on Monday. The joint venture, known as "S-LCD," was created in the year 2004 because Sony was struggling to keep up in the flat panel TV business. Sony decided to invest in one of Samsung's factories to get a stable amount of panels into its LCD TV franchise. The plan didn't work for Sony, unfortunately, as it experienced loss after loss for seven years without a single dime of profit.
Because of the declining price tag on TV sets, it seemed logical for Sony to buy the panels from Samsung rather than create its own factories, especially considering that it would have to pay higher manufacturing costs in Japan than Samsung would in South Korea. Sony never made its own panels. The company mentioned, however, that it will come into terms with Samsung to buy panels under a new partnership and it will also continue to buy manufactured panels from other sources.
Despite the current setback for Q3 2011, Sony expects to gain monumental revenue after January 2012 due to the savings made from the dissolution of its previous joint venture with Samsung. Sony's spokesman Takashi Uehara says that it's not exactly clear what Sony's future looks like for next year, though.
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