Hirai tasked with solving Sony's woes Sony Corp.'s heavy reliance on its sluggish TV business has left deep scars on the company, leaving its new management with the difficult task of comprehensively rebuilding the group's business structure. Under departing Chief Executive Officer Howard Stringer, Sony was unable to shed its reliance on its stagnating television business--one of the major factors that led to a greater-than-expected deterioration in earnings for the year ending in March. When Stringer steps down, Executive Deputy President Kazuo Hirai will take over as CEO and president starting April 1. Hirai will have to grapple with difficulties unprecedented in Sony's history by rebuilding the massive company's entire foundation. At an inaugural news conference on Thursday, Hirai, 51, acknowledged that Sony's worsening performance is serious. "Japan's electronics industry is sluggish, and Sony is no exception. We feel a serious sense of crisis," Hirai said. Sony's TV division is sure to log a deficit for the eighth consecutive year as TV prices have been declining in Europe, the United States and Japan. Sony, which has dissolved its joint venture with South Korea's Samsung Electronics Co. for liquid crystal display panels, recorded its largest-ever operating loss of about 150 billion yen for the April to December period in 2011. The impact of the flooding in Thailand on its TV business is expected to lessen from the next business term, but its TV business is still on the route to recovery. Stringer, who will assume the post of chairman of the board of directors in June after stepping down as CEO, succeeded in boosting Sony's music and film business, but failed to pull its TV business out of the red. TVs are the most important product for Sony, which makes many TV-related products, such as video cameras and video game consoles. "If we easily withdraw or scale down [our TV business], we'll lose part of our relationship with our customers," Hirai said. Sony has already taken a step in the right direction in reducing costs for procuring display panels by dissolving its joint venture with Samsung. But Shiro Mikoshiba, a senior analyst at Nomura Holdings Inc., pointed out Sony's review of its procurement costs is not enough to rebuild the company. "The company needs to undergo drastic organizational restructuring by slashing its sales workforce, as well as its research and development section," he said. Hirai also expressed his intention to concentrate the firm's investment in its camera, game and smartphone businesses, while further promoting structural reforms for its TV business. He also plans to develop its medical business as one of Sony's core businesses. Hirai said the firm will conduct a strict review of other money-losing products and businesses, and will consider collaborations with other companies. However, it remains to be seen whether such strategies will yield results. For instance, Apple Inc. and Samsung are overwhelmingly dominant in the smartphone business. In an effort to boost its medical business, Sony has proposed forming a capital alliance with Olympus Corp. But it has to win a fierce competition against medical-equipment provider Terumo Corp. and Fujifilm Holdings Corp. to realize the plan. While Hitachi Ltd. and Toshiba Corp. have been making drastic withdrawal and investment efforts following the Lehman Shock in 2008, it is undeniable that Sony has lagged behind in prioritizing its various businesses under Stringer. === Hirai a hot-blooded man Hirai, who has spent about 20 years living in the United States since he was a child, speaks fluent, native-level English. His dashing appearance while presenting new products at overseas news conferences gives the impression that he is "cool." However, he is also a hot-blooded man. When he was president of one of Sony's game industry subsidiaries, he often held meetings with young employees and engaged in thorough discussions until everyone present was fully satisfied. After meetings, he often went out for drinks with employees. When appointed to the post of executive deputy president last year, Hirai made a swift decision to dissolve the joint venture with Samsung for LCD panels, and people around him highly praised his leadership. The current task set before Sony is rebuilding a TV business that is likely to suffer losses for an eighth consecutive year. Though he was involved in the game division for a long time and has a little experience handling Sony's TV business, he emphasized the importance of rationality when carrying out reforms. Stringer speaks very highly of Hirai's personality, strong will and leadership. Hirai's ability to make a swift judgment and take actions will be put to test, observers say. Hirai, whose wife, son and daughter currently live in the United States, enjoys cycling on his days off.
Pages to are hidden for
"6"Please download to view full document