February 2, 2012 / 1:32 AM / 7 years ago

New Sony CEO to confront scale of turnaround task as loss looms

TOKYO (Reuters) - The incoming chief of Japan’s Sony Corp will confront the enormity of his task to turn around the business on Thursday, when the humbled electronics icon is expected to show it is headed for its fourth straight annual loss.

Kazuo Hirai, the Sony veteran who revived its PlayStation gaming business, was named on Wednesday night, the eve of its quarterly results statement, as the company’s new chief executive. He will replace Howard Stringer, effective April 1.

Later on Thursday, Sony is set to show it barely broke even at an operating level for its normally lucrative third quarter ended in December, as it heads for a net loss of 132.8 billion yen ($1.74 billion) for the full fiscal year to March, according to Thomson Reuters I/B/E/S data.

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.

Hirai will also be leading a drive at Sony, whose products range from of PlayStation games consoles to “The Smurfs” movie, to integrate its online content across devices including mobile phones, and above all to recapture the innovative flair that made it king of global consumer electronics in the 1980s.

Hirai, 51, who made his name hauling the 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.”


His 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 hey customer is Apple Inc.

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.

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 the innovative edge behind products like the Walkman and Playstation and that has ceded ground to Apple and Samsung as consumers snap up their iPhones, iPods and Galaxy gadgets.

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.

($1 = 76.1300 Japanese yen)

Editing by Mark Bendeich

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