Movies are the least of Sony's problems

Sony pulls 'The Interview' release
Sony pulls 'The Interview' release

The massive hack that's humiliating Sony executives and enraging Hollywood stars has drawn plenty of attention to Sony's money-losing movie business.

But the film business is really the least of Sony's problems.

That's partly because Sony's studio accounts for less than 10% of its total sales.

The company is really struggling in the realm of electronics, which it once dominated with innovations like the Sony Walkman and the Trinitron TV.

  • Its TV manufacturing unit, which once produced Sony's fattest profit margins, now struggles to make money.
  • It dropped out of the personal computer business earlier this year.
  • Sony's smartphone business has just 3% of the market. And it wrote down the value of that unit by $1.7 billion last quarter, which led to another loss for the entire company. It lost $1.2 billion in its fiscal year that ended in March.
  • Its debt was downgraded to junk bond status early this year.
  • It recently suspended its dividend for the first time in its history.

"Sony had very large margins on its consumer electronics business because it had such a good brand," said Van Baker, a consumer electronics analyst at Gartner. "But consumer electronics has become very competitive, especially with competitors in China."

Related: Can anything save Sony?

There are a few bright spots for Sony (SNE). Its PlayStation video game console is a hit, beating Microsoft (MSFT)'s Xbox. Japanese consumers, who still constitute a major market for electronics, remain very loyal to the Sony brand. And the Japanese government's policy of keeping the value of the yen low helps make its prices competitive in overseas markets such as the U.S.

But Sony has been struggling for over a decade -- at least since Apple (AAPL) first unveiled the iPod in 2001.

In addition to the hack, Sony's film unit is facing the same headwinds as every other studio that makes money selling movie tickets in the age of the Internet. And it's had has had its share of flops, like the 2013 Channing Tatum thriller "White House Down."

sony television
Sony's televisions used to produce top profit margins for the company but now that unit struggles to make money.

But it's still capable of turning out hits, such as the Spider-Man or James Bond franchises, as well as critically acclaimed films like last year's "American Hustle." In fact, Sony management balked when hedge fund titan Dan Loeb pushed the company to spin off the studio early last year.

Sony has been slow to recover from a series of missteps in the late 90s and early 2000s, Baker said. "I don't know if they can become Sony again."

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