Sony selling Madison Avenue for $1.1bn

Sony said on Friday it was selling its US headquarters in Manhattan for $1.1 billion as part of an overhaul aimed at rescuing the Japanese consumer electronics giant's tattered balance sheet. New York-based commercial property firm Chetrit Group was leading a consortium that agreed to buy the Madison Avenue building in a deal expected to close in March, Sony said. "Sony is undertaking a range of initiatives to strengthen its financial foundation and business competitiveness and for future growth," it said in a statement announcing the sale. "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. This sale is made as a part of such initiatives." The deal would net Sony about $770 million after paying off building-related debt and transaction costs, it said, adding that businesses including its movie and music divisions would remain in the tower for up to three years under a lease agreement with the buyer. The 37-story building on one of New York City's best-known thoroughfares opened in 1984 and was sold to Sony in 2002. Sony was "re-evaluating" its outlook -- which forecasts a 20 billion yen ($223 million) annual net profit in the fiscal year ended March -- "to take into account this sale and other factors that might affect such forecast". The maker of PlayStation game consoles and Bravia televisions lost a whopping 456.66 billion yen in its previous fiscal year, the fourth in a row, with its massive restructuring including selling off its chemical division while investing 50 billion yen in camera and medical equipment maker Olympus. Last year, the firm said it would cut about 10,000 jobs and spend nearly $1.0 billion on a massive corporate overhaul designed to shake up its product line and cut costs, which new chief Kazuo Hirai described as "urgent". The sale comes as Japanese media reported this month that the embattled firm was also planning to sell one of its main buildings in Tokyo's Osaki district, which accommodates Sony's struggling television division. The company's hard times saw its its stock value tumble below 1,000 yen a share in June, for the first time since the era of the Walkman. Sony shares were up 6.73 percent at 1,093 yen on Friday morning in Tokyo, after jumping 5.67 percent the day before after Goldman Sachs upped its recommendation on the stock to neutral from sell. Japan's battered electronics sector including giants Sony, Panasonic and Sharp has suffered from myriad problems including a high yen, slowing demand in key export markets, fierce overseas competition and strategic mistakes that left its finances in ruins. The industry has been awash in huge losses and credit rating downgrades, with rival Sharp saying last year it would put up real estate as collateral for bank loans -- including its Osaka headquarters -- to stay afloat.