In recent days corporations publicized their financial activities to the masses highlighting the performance they’ve done over the course of three months.
Though JU is not a financial-aficionado portal but the recent Jolla split-up into a software focused company, makes us trail the groups which underwent splitting strategy and find out whether or not that mechanism came to fruition.
Among them, at the very first, Sony posted strong quarterly earnings last Thursday booking the most profitable first quarter since 2007. The Japanese giant raked in 96.9 billion yen ($780 million dollars) of operating profits thanks to the ever growing imaging-sensors and video game markets. Comparing the last three months of Sony’s performance to the previous year, the company’s gaming division was up 12.1 percent, pulling in ¥288.6 billion ($2.33bn), while its mobile communications unit slumped by 16.3 percent, recording ¥280.5bn ($2.27bn) in revenue. While evidently still important to Sony’s bottom line, the phone business has now been surpassed by sales of PlayStation consoles and games, and may soon fall behind the company’s imaging division as well. The Device segment of Sony’s earnings, which includes camera sensors, grew by 35.1 percent and produced ¥237.9bn ($1.92bn) in revenue.
Contrary to the blossomed Imaging and Gaming divisions, the mobile unit however, reported a 22.9bn yen loss as Sony continues to decline in a mobile market dominated by Apple, Samsung and Chinese rivals like Huawei and Xiaomi.
To that end, the company will cease the production of phones with lower profit margin while focusing on higher-end models.
This profitability did not come out of nowhere as CEO Kaz Hirai made an “agonizing decision” after nightmarish Q3 2013 financial report, to split the corporation into profitable, more dynamic pieces. For that reason, Sony handed its much loved VAIO business to Japanese Industrial Partners, known as JIP, as well as splitting off the TV division by July 2014. That of course comes with a round of job cuts as much as 5000 worldwide.
“Another reason to split off is that it helps foster managerial talent,” Hirai said. “We want our heads of businesses to feel like entrepreneurs as opposed to middle management inside a huge organization.”
Mobile juggernaut Qualcomm after a big hit from Samsung and other critics and an agreement to pay a fine of $975 million to the Chinese government’s National Development and Reform Commission for anti-competitive practices is weighing splitting strategy. Jana Partners, a high-profile investment company which owns a chunk of the company weighing around 14bn dollars is pressing the board to split the chip division from its patent licensing arm to counter the steeping revenue and third profit warning.
“We decided we were going to take a fresh look at the corporate structure of the company,” Qualcomm president Derek Aberle said in an interview, adding that the chipmaker has reviewed its options twice already in the past decade.
“The environment is constantly changing so the analysis done earlier may not be valid anymore, so it’s in that context that we’re taking a look at it again now,” Aberle said.
Last stop … awh; we’re not going to turn away from it. Nokia has also posted a seamless result beating analysts’ estimates. The network equipment maker has divided itself into three branches which obviously are the Network, HERE (which Nokia just sold it today for 2.5bn euros to the German car makers) and Technologies segment.The Finnish telecom group reported on Thursday that sales increased nine per cent compared with the same period last year, to 3.2 billion euros. Operating profit meanwhile almost doubled to 508 million euros in Q2, compared with 284 million euros last year.
Quarterly total revenue was €290 million (approximately $320.7 million), up 25% year over year. The revenue growth can be attributed to strong sales of new vehicle licenses for embedded navigation systems. Operating profit (non-IFRS) in the reported quarter stood at €27 million ($29.9 million) against a breakeven in the second quarter of 2014.
Nokia Technologies Segment
Quarterly total revenue came in at €193 million (approximately $213.4 million), up 31% year over year. Operating profit (non-IFRS) at the segment expanded 17% on a year-over-year basis.
Data collected from Zacks.com
In the second quarter, Nokia, the world’s No. 3 telecom network equipment maker, posted a surprise rise in profits and margins, helped by lucrative software sales and a refusal to chase lower-margin contracts.
This itself highlights the importance of software and stamps the (though yet to be proven) Jolla’s reconnaissance of software and refocusing its muscles and brains on developing Sailfish OS as companies and countries are stretching hands to adopt the phoenix out of ashes of MeeGo.
Only time will tell if this strategy anchors a turnaround for the Finnish startup in the coming years and … best of luck.