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Sony's mobile unit begins to sink; deepens loss, cuts 15 percent of staff

Sony's mobile division is heading for financial difficulty, despite efforts to turnaround the crucial business unit, as the company cuts its outlook — and its staff.

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Image: CNET/CBS Interactive

Sony's mobile unit is heading for trouble, after the electronics giant cut the unit's outlook amid falling smartphone sales.

Chief executive Kazuo Hirai announced on Tuesday [PDF] a massive impairment charge of about $1.7 billion. But he said Sony remains committed to the business, keeping it as one of three core Sony divisions, despite slow market growth.

In its full year forecast ending March 31, the Japanese giant widened its net loss to $2.15 billion from $466.3 million. The company will not issue a dividend for the first time since it listed in 1958, according to Reuters, quoting Hirai.

Sony will also cut 15 percent of its mobile division staff by the end of the current fiscal year, ending mid-March 2015. That accounts for about 1,000 employees out of the total 7,100 staff.

Details of the layoff will be reported in October at its fiscal second quarter earnings.

"I will be at the center of making sure that restructuring will be completed this year and that we will turn a profit in the next financial year," the chief executive said. "A recovery is my responsibility."

This is a turnaround from Hirai's previous effort to expand the unit, ahead of an expected rise in sales.

Sony has struggled in the face of Apple, Samsung, and other Asian smartphone starters, like Xiaomi, and Lenovo. The company has few hooks in the U.S. and Chinese markets, making it difficult to expand its footprint.