February 01, 2012

Sony's Future CEO, Kazuo Hirai, Faces Challenges in Turning around Company


The newly named CEO of Sony, Kazuo Hirai, will have a lot of challenges when he takes over in April at the once-thriving company.

Hirai, who now runs Sony’s consumer products business, will replace the well-known Howard Stringer on April 1. Stringer will continue as chairman of the company’s board.

To get an idea of his priorities, Hirai has said that the company’s core electronics business needs to grow, such as in digital imaging, smart mobile and games. The company also needs “to turn around the television business” and “accelerate the innovation that enables us to create new business domains," Hirai said in a company statement.

But there are widespread reports increased television sales may be among the most important efforts the company could undertake under the new CEO. Sony’s troubled television unit may end up losing $2.3 billion during the current fiscal year alone, according to a report from Bloomberg News.

“The most pressing issue is to turn around the TV business,” Ryosuke Katsura, an analyst at Mizuho Securities Co., told Bloomberg about Sony. Already, Sony has come up with a plan to cut in half the number of TV sets it sells to 20 million in the next fiscal year. It will also make fewer LCD panels opting instead to outsource them.

Hirai said last year that televisions are a "fundamental platform" for Sony, with smartphones, tablets and laptops also being important, PC World reported.

It comes as little surprise the company chose Hirai as CEO – an insider who previously led Sony’s gaming division.

Stringer recommended Hirai as his replacement, and said the move needs to take place now. “Kaz is a globally focused executive for whom technology and the cloud are familiar territory, content is highly valued, and digital transformation is second nature,” Stringer said in the Sony statement. “I believe his tough-mindedness and leadership skills will be of great benefit to the company and its customers in the months and years ahead.”

On Thursday, Sony is expected to release its third-quarter earnings. Sony predicts the “fourth straight year of net losses for the fiscal year through March,” according to a report from The Associated Press. “The company has gone through massive cost cuts and restructuring and is hoping to recover in flat-panel TV, gaming and personal computer businesses.” Sony is valued at $18 billion, Bloomberg said.

The prominent brands that once marked Sony’s success – such as the Walkman – have lost market share to Apple’s iPod and iPhone. Its television sales faces pressure from Samsung Electronics and LG Electronics. But Sony is far from the only Japanese TV maker facing problems in the current climate.

“Japanese TV makers are facing too many troubles; the stronger yen, falling prices, sluggish demand and sliding market share due to competition,” Yoshihiro Okumura, who works with Chiba-Gin Asset Management Co., told Bloomberg. “If they can introduce a hit product or a next generation product, then the situation may change.”

Also hurting Sony has been the deadly tsunami and earthquake that damaged plants in Japan and more recent flooding in Thailand.

The company has tried to put on a positive face recently at the Consumer Electronics Show held in Las Vegas, TechZone360 reported. Stringer gave the opening keynote address at the trade show.

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Ed Silverstein is a TechZone360 contributor. To read more of his articles, please visit his columnist page.

Edited by Rich Steeves



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