Tokyo: Sony Corp., the struggling Japanese electronics and entertainment company, is headed in the right direction although its comeback is not yet complete, its chief executive said Thursday.
Kazuo Hirai told reporters that Sony is now more nimble and focused under his leadership which began nine months ago. Sony has lost money for the past four years, and has fallen behind powerful rivals such as Apple Inc. and Samsung Electronics Co. in profitability and innovation.
Hirai acknowledged Sony had gotten bogged down in its sprawling bureaucracy, and stressed he is making a point of personal involvement in product development to make sure good ideas don’t get squelched.
“I’m shepherding several of those projects personally myself to make sure that it doesn’t get held up in the bureaucracy, or it doesn’t suddenly fade away in the approval process,” he said at Tokyo headquarters. A continuing headache has been Sony’s TV division, now in its ninth straight year of red ink. Like other Japanese electronics makers, Sony is taking a beating from Chinese, Taiwan and South Korean rivals that offer products at much cheaper prices.
Hirai said Sony will target customers willing to pay more and won’t get sucked into a price war. The make of Bravia TVs and PlayStation 3 game machines reports earnings next month for last year’s final quarter.
The numbers are expected to highlight a Sony midway through its recovery. For the previous fiscal year ended March 2012, Sony reported a record annual loss of ¥457 billion ($5.1 billion) amid troubles exacerbated by factory and supplier damage in northeastern Japan from the 2011 earthquake and tsunami.
Still, Hirai was upbeat, stressing his determination to move or “wow” people with new products. He proudly held up Sony’s new waterproof, full-HD cellphone, set to go on sale around the world in the next few months.
That product, as well as the 4K or “ultra-HD” TV, whose displays have four times the pixels of today’s TVs, received mostly positive feedback at the recent International CES gadget show in Las Vegas. But Hirai acknowledged it may take several years, or as long as a decade, for 4K technology to catch on.
He noted Sony’s advantage in running a movie studio to make sure Sony Pictures offers 4K. Yasunori Tateishi, who has written a book on Sony’s recent woes, said the same price plunges that plagued flat-panel TVs could hit 4K products, unless Sony can clearly demonstrate that it is offering a superior product.
“Sony needs to show that it is showcasing its unique imagery technology, not doing something everyone is doing,” he said. “It needs to create new sectors in the electronics market. Otherwise, it’s stuck fighting over the crumbs of the same pie.”
Sony has been criticized for failing to take advantage of having both entertainment and electronics businesses. Still, Hirai was sticking to the old “synergy” strategy, while making changes such as revamping senior management and carving out alliances. He pointed to Sony’s investment in Japanese medical equipment maker Olympus Corp. and joint development with Panasonic Corp. in OLED, or organic light-emitting diode, displays as the kind of partnerships in the works. “We need to be a lot faster in decision making. We need to be a lot faster in execution. We need to be passionate about our product,” Hirai said. “Are we perfect? No. But I think we’ve improved significantly.”
Sony sells Madison Avenue headquarters
Sony said on Friday it was selling its US headquarters in Manhattan for $1.1 billion as part of an overhaul aimed at rescuing the Japanese consumer electronics giant’s tattered balance sheet.
New York-based commercial property firm Chetrit Group was leading a consortium that agreed to buy the Madison Avenue building in a deal expected to close in March, Sony said.
“Sony is undertaking a range of initiatives to strengthen its financial foundation and business competitiveness and for future growth,” it said in a statement announcing the sale.
“At the same time, Sony is balancing cash inflows and outflows while working to improve its cash flow by carefully selecting investments, selling assets and strengthening control of working capital such as inventory. This sale is made as a part of such initiatives.”
The deal would net Sony about $770 million after paying off building-related debt and transaction costs, it said, adding that businesses including its movie and music divisions would remain in the tower for up to three years under a lease agreement with the buyer.
The 37-story building on one of New York City’s best-known thoroughfares opened in 1984 and was sold to Sony in 2002.
Sony was “re-evaluating” its outlook—which forecasts a ¥20 billion ($223 million) annual net profit in the fiscal year ended March—“to take into account this sale and other factors that might affect such forecast”.
The maker of PlayStation game consoles and Bravia televisions lost a whopping ¥456.66 billion in its previous fiscal year, the fourth in a row, with its massive restructuring including selling off its chemical division while investing ¥50 billion in camera and medical equipment maker Olympus.
Last year, the firm said it would cut about 10,000 jobs and spend nearly $1.0 billion on a massive corporate overhaul designed to shake up its product line and cut costs, which new chief Kazuo Hirai described as “urgent”.
The sale comes as Japanese media reported this month that the embattled firm was also planning to sell one of its main buildings in Tokyo’s Osaki district, which accommodates Sony’s struggling television division.
The company’s hard times saw its stock value tumble below ¥1,000 a share in June, for the first time since the era of the Walkman.
Sony shares were up 6.73% at ¥1,093 on Friday morning in Tokyo, after jumping 5.67% the day before after Goldman Sachs upped its recommendation on the stock to neutral from sell.
Japan’s battered electronics sector including giants Sony, Panasonic and Sharp has suffered from myriad problems including a high yen, slowing demand in key export markets, fierce overseas competition and strategic mistakes that left its finances in ruins.
The industry has been awash in huge losses and credit rating downgrades, with rival Sharp saying last year it would put up real estate as collateral for bank loans—including its Osaka headquarters—to stay afloat.