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Sony's chairman says he's stay at the helm of the ailing company for a revival plan that runs through 2013
By Mariko Yasu
(Bloomberg) — Sony Corp. (SNE) Chairman Howard Stringer wants to remain the company's chief for at least three years to meet a turnaround plan delayed by the global recession and the yen's surge to a 14-year high against the dollar.
The Welsh-born executive said yesterday he wants to lead Sony through a business plan that lasts through March 2013, by which time he'll be 71. Sony last month pushed back key profitability targets as the maker of Bravia televisions battles to recover from its first back-to-back annual losses since its 1958 listing.
"Compared to China and Korea, our fixed costs are high and the yen is high, which has an impact on our exports," said Stringer, who spoke with reporters at Sony's Tokyo headquarters. "It makes competition tough."
Stringer, who's cut about 30,000 jobs and shut more than a dozen factories since becoming chief executive officer in 2005, said he plans to continue streamlining Sony to compete against South Korean electronics makers such as Samsung Electronics Co. The former CBS president is championing a push into 3-D movies, online services and electric-car batteries to spur sales growth.
"There's so much being asked of Stringer and he's not a god," said Yuuki Sakurai, general manager of financial and investment planning at Tokyo-based Fukoku Mutual Life Insurance Co. "In the next stage, he's got to give a better picture of the business model."
Sony, which generated 76 percent of revenue outside of Japan last fiscal year, projected in October the yen would average 90 to the dollar in the six-month period beginning Oct. 1. The company estimates it loses about 1 billion yen ($11 million) in annual operating profit for every yen gain against the dollar.
The Japanese yen climbed to as high as 84.83 per dollar last week, its strongest against the greenback since July 1995. The won has fallen 20 percent against the dollar in the past two years, helping South Korean exporters gain market share from Japanese rivals.
Sony and Panasonic Corp., the world's two largest makers of consumer electronics, are eliminating more than 48,000 jobs as they struggle to compete against Samsung, Asia's largest maker of chips and flat screens. Suwon, Korea-based Samsung reported record profit in the third quarter, citing a global economic recovery that spurred a rebound in prices.
Stringer said yesterday Sony has adjusted the gain by the local currency and that he doesn't expect the yen to keep strengthening.
Sony rose 1.4 percent to close at 2,510 yen in Tokyo, extending its gain this year to 31 percent. Since Stringer became chief executive, the stock has fallen in excess of 30 percent, more than double the drop in Japan's benchmark Nikkei 225 Stock Average.
Sony saw "very positive signs" for sales of TVs, personal computers, PlayStation 3 game consoles and Blu-ray discs during the Thanksgiving week in the U.S., Stringer said.
Sony, which pioneered the portable-music industry with its Walkman players in the 1970s before ceding the market lead to Apple Inc. (AAPL), said it will start selling TVs, Blu-ray players and game consoles that can show 3-D images from next fiscal year. 3- D products, excluding content, will generate more than 1 trillion yen in 12 months to March 2013, Sony said last month.
Sony has struggled to produce hit products lately, Fukoku's Sakurai said. "Companies in the U.S. and other places are now the ones coming up with the gadgets, things like the iPod."
Sony is shifting its focus to selling new products such as 3-D TVs, lithium-ion car batteries and online services for downloading music and pictures as Stringer nears his target of cutting 330 billion yen in costs by eliminating 20,000 jobs this fiscal year.
Sony, which plans to spend 100 billion yen researching and developing lithium-ion batteries, is in talks with to supply its products to several automakers, Executive Deputy President Hiroshi Yoshioka said last week. The company, which recalled more than 9 million laptop batteries in 2006, is lagging behind Sanyo Electric Co. in entering the car-battery market.
"I don't think there are any deals that are written in stone," Stringer said, referring to battery makers' discussions with carmakers. "If you produce the right batteries, they will come."
Sony said last month it now aims to reach a 10 percent return on equity by March 2013, from its previous target of March 2011. To reach the goal, last achieved when the company posted record profit in the 12 months ended March 2008, Sony is selling 90 percent of its biggest North American TV- manufacturing site and plans to boost outsourcing of TV production.
"They may have to slim down their businesses and concentrate on the areas where they can win," Fukoku's Sakurai said. "He has to show which way the company is going to move and get people concentrated on moving in the same direction. He hasn't done that yet."
To contact the reporter on this story: Mariko Yasu in Tokyo at email@example.com.