New Sony CEO to confront scale of turnaround task as loss looms
TOKYO - The incoming chief of Japan's Sony Corp will face the enormity of his task to turn around the electronics icon on Thursday when the firm is likely to forecast a fourth straight annual loss as it loses ground to rivals Apple and Samsung.
Kazuo Hirai, the Sony veteran who revived its PlayStation gaming business, was named on Wednesday as the company's new chief executive. He will replace Howard Stringer on April 1.
Sony shares were down 0.4 percent on Thursday in a market that was up 0.7 percent, with investors awaiting the company's earnings due around 0600 GMT.
Sony is expected to have barely broken even at an operating level for its normally lucrative October-December quarter, as it heads for a net loss of 132.8 billion yen ($1.7 billion) for the full year to March, Thomson Reuters I/B/E/S data shows.
There is unlikely to be a honeymoon period for Hirai, who is under immediate pressure to sort out Sony's ailing TV business after it fell behind South Korean rivals such as Samsung Electronics in a market where prices are tumbling.
The TV business is expected to make a loss for its eighth straight year in 2011/12.
Above all, Hirai will be leading a drive at Sony, whose products range from PlayStation games consoles to "The Smurfs" movie, to recapture the innovative flair that made it king of global consumer electronics three decades ago.
In the 1980s, Sony dreamt up the Walkman personal music-player and then in the 1990s the hugely successful PlayStation, but it has since ceded ground to Apple Inc and Samsung as consumers snap up their iPhones, iPods and Galaxy gadgets.
There are some doubts that 51-year-old Hirai - tall, urbane and a fluent English speaker - can rekindle innovation at Sony.
"The biggest issue is top management ... There needs to be a vision for the products, for innovation," said a former Sony executive who felt that a new management mindset was needed.
He told Reuters he believed Sony would ultimately shut the TV business unless it came up with fresh ideas to revive it. "There is still a chance in home electronics, but I imagine the day may come when they will pull the plug on TVs," he said.
Hirai, who made his name hauling the wayward PlayStation division back into the black two years ago, sketched out his priorities in a statement on Wednesday night.
"The path we must take is clear," he said. "To drive the growth of our core electronics businesses - primarily digital imaging, smart mobile and games; to turn around the television business; and to accelerate the innovation that enables us to create new business domains."
Hirai's predecessor, Welsh-born Stringer, a former journalist who ran U.S. broadcaster CBS, had been brought in as a rare foreign CEO in Japan to shake things up, but many analysts see his major achievement as cost-cutting.
Stringer sold off TV factories in Spain, Slovakia and Mexico and outsourced more than half of its production to other companies, including Hon Hai Precision Industry, the contract electronics maker whose key customer is Apple.
Recently, Sony exited an LCD panel joint venture with Samsung, enabling it to obtain screens for its TVs more cheaply. It also agreed to buy out Ericsson's half of their smartphone venture for $1.5 billion to shore up its position in a market where Apple and Samsung have become leaders.
Sony's shares have lost nearly two-thirds of their value since Stringer, who turns 70 this month, took the helm as CEO and chairman in 2005.
Hirai was effectively anointed as Stringer's successor last March when he was promoted to head Sony's consumer products and services businesses, which produce the bulk of Sony's $85 billion in annual sales.
"They've been grooming him for a while," said Dan Ernst, Hudson Square analyst. "I think he will carry on the plan for Sony - as difficult as it is."
That plan means turning around a business that many believe has lost its innovative edge.
A chief concept in the strategy hinges on merging Sony's robust roster of entertainment properties - including singers Kelly Clarkson and Michael Jackson, and the "Spider-Man" and "Men in Black" film franchises - with its Vaio, Bravia and other electronics brands, in an effort to boost sales.
The last year has been brutal for many Japanese companies, hit by a strong yen that hurt exports, and two natural disasters - the March earthquake in Japan and record floods in Thailand.