October 25, 2020

Sony Chief Still in Search of a Turnaround

It is as good an analogy as any to Howard Stringer’s stint as chief executive of Sony, the electronics and entertainment giant: upswing, stumble, repeat.

Six years after taking the helm of Sony in a surprise appointment, Mr. Stringer has yet to show much more than a glimmer of a turnaround at the troubled company he inherited.

On Thursday, the company, which is based in Tokyo, confirmed that the damage from Japan’s natural disasters in March — and the havoc dealt to Sony’s supply chains in their aftermath — had forced it to take tax-credit provisions that resulted in a $3.2 billion net loss for the business year just ended. The loss was Sony’s biggest deficit in 16 years, and its third in a row.

Mr. Stringer, who is 69, has said he wants to stay on until 2013, to see through a management plan that aims to raise the company’s profitability. For the business year that started in April, Sony will aim for a 80 billion yen ($984 million) net profit, it said Thursday.

But the industry question arises: Will Mr. Stringer keep his job until then, and if he does, is there any good prospect of salvaging Sony?

And could anyone turn the company around at this point?

“At best, his mission is half-done,” said Hideki Yasuda, a senior technology analyst at the Ace Economic Research Institute, which is based in Tokyo. “Sony may keep him on for lack of better alternatives,” he said, “but it’s difficult to see how things might be different going forward.”

Sony officials declined to comment on Mr. Stringer’s status, and he turned down a request for an interview. Mr. Stringer, a Welsh-born American who joined Sony’s American unit from CBS in 1997, has enjoyed pockets of success since being elevated to the top spot at the Japanese parent company.

He aggressively cut costs and streamlined some of Sony’s sprawling lines of business, finally exiting legacy businesses like the Walkman, for example. (Late last year, Sony announced that it was stopping sales of the Walkman tape player, with which the company practically invented portable recorded music a generation ago, but whose success Sony could not translate to the digital era.)

And while the company had long insisted on making all of its products itself — unlike the more successful Apple, which outsources its manufacturing to concentrate on research, development and marketing — Mr. Stringer has been willing to break that mold.

For example, Sony has already outsourced 50 to 60 percent of its TV set manufacturing to the Taiwanese parts maker Hong Hai Precision Industry, according to Atul Goyal, a technology analyst at CLSA Asia-Pacific Markets, a brokerage firm based in Hong Kong.

Sony has closed redundant factories, including one in Japan where the company once made its popular Trinitron TVs.

“Few Japanese companies are so bold as to exit noncore businesses,” Mr. Goyal wrote in a report in November. “Sony is, and it will do more.”

Meanwhile, Mr. Stringer has pushed aside much of Sony’s old guard and promoted young, talented executives, like Kazuo Hirai, 50, who has rebuilt Sony’s video game business after several troubled years in the red.

Last month, Mr. Hirai was tapped as executive deputy president, making him a front-runner to eventually succeed Mr. Stringer as chief executive.

Some of Mr. Stringer’s changes have begun to pay off. Both Sony’s mobile phone and gaming arms turned profits in the last business year. Its TV set sales grew 44 percent, though declining prices ate into profits. The company said Thursday it would expand its research and development and capital investment budgets this year.

But troubles both old and new have frustrated Mr. Stringer’s turnaround efforts. The March 11 earthquake and tsunami disrupted production at 10 Sony plants in northern Japan, severed vital supply chains and temporarily put a damper on demand among Japanese consumers. An older issue, the stubbornly strong yen, continues to hurt the company’s competitiveness overseas.

Brooks Barnes reported from Los Angeles.

Article source: http://feeds.nytimes.com/click.phdo?i=041d5a6b715631d448a38773979edf79

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