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Sony centers power at top in Stringer

Fri, 02/27/2009 - 7:10am
Yuri Kageyama, AP Business Writer

TOKYO (AP) – Sony sent a message of change Friday in centering power on Chief Executive Howard Stringer, who will also become president and will gain greater say over Sony’s core electronics business as Japan's iconic electronics maker tackles a painful global slump.

Welsh-born American Stringer, the first foreigner to head Sony Corp., replaces Ryoji Chubachi, who steps down as president April 1 but remains on the board as vice chairman to oversee quality and ecological strategy, and to support the new management team.

Chubachi, 61, has overseen the electronics business, which has been battered by shrinking consumer demand and the strong yen. The problems in electronics, including losses in TV operations, are a main reason Sony is tumbling into its first annual net loss in 14 years.

Stringer, 67, introduced a team of four younger executives, three of them in their 40s – including Kazuo Hirai, 48, head of Sony's game unit – to spearhead efforts to bring together Sony's sprawling empire, spanning TVs, games, movies and semiconductors, to develop products and services for the digital age.

At a news conference at Sony's Tokyo headquarters, Stringer acknowledged Sony had not been quick enough and had lost to American rivals like Apple Inc., as well as Asian ones like Samsung Electronics Co. And Sony had to do more to integrate its hardware gadget strengths with software businesses like Internet services, video gaming and movies, and other entertainment content, he said.

"We must drive change along several fronts," Stringer told reporters. "We must regroup and rationalize our important core electronics product business. We must accelerate the introduction of innovative network product and service offerings."

But besides references to the company's PlayStation 3 businesses, such as the "Home" virtual community, Net-linking TVs and other such devices, the executives offered little that was overly specific or surprising.

Sony's gaming business has had mixed results, and some analysts say the PlayStation 3 hasn't fared as well as it should have against Microsoft Corp.'s Xbox 360 or Japanese rival Nintendo Co.'s hit Wii console.

But Stringer said his younger, Internet-savvy team, whom he called "the four musketeers," would help realize a transformation toward a more competitive, lean, innovative and nimble Sony.

“These four executives are very familiar with the digital world," Stringer said. "We have a whole range of customers who want something different."

Hirai, the chief of Sony Computer Entertainment, will head the Internet-linking products and services group with Kunimasa Suzuki, 48, formerly head of Sony Electronics in the U.S.

Hiroshi Yoshioka, 56, now head of TV operations, and Yoshihisa Ishida, 49, president of the Vaio computer group, will lead a new consumer products group that brings together Sony's TV, digital imaging, home audio and video businesses.

The management reshuffle sends a good message about Sony's commitment to speedy, decisive leadership under Stringer, said Nobuo Kurahashi, analyst at Mizuho Investors Securities in Tokyo.

"It's a positive sign of how Sony is frantically moving forward toward change, including structural changes, especially in its TV and other electronics businesses," he said.

Kurahashi was quick to add that times were hard – for any company – amid the global slowdown, and so the future was still uncertain for Sony.

But he said Stringer, being non-Japanese, may be able to deliver quicker decisions than a typical Japanese manager, who may tend to be more bureaucratic and seek group consensus, which takes time.

Both Chubachi and Stringer, who took office together to lead Sony in 2005, had promised a dramatic turnaround at Sony.

But the downturn – hitting during the key year-end shopping season – and the surging yen, which erodes foreign earnings, have proved too much. Sony is particularly vulnerable to a strong yen because exports make up about 80 percent of its sales.

Sony is expecting a 150 billion yen ($1.5 billion) net loss for the fiscal year through March. The last – and only – time Sony reported a loss, for the fiscal year ending March 1995, the red ink came from one-time losses in its movie division, marred by box office flops and lax cost controls.

The latest projection underlines the serious problems at its electronics division, where Sony has in recent years lost out to rivals, including Sharp Corp. in flat-panel TVs, and even in Walkman equivalents to Apple's iPod.

Sony has already said that it is slashing 8,000 of its 185,000 jobs around the world, and that it will shutter five or six plants – about 10 percent of its 57 factories. It is also trimming another 8,000 temporary workers who aren't included in the global workforce tally.

Sony shares gained 2 percent to 1,668 yen. The new management team was announced after trading ended in Tokyo.

There had been some speculation that Sony executives would be stepping down to give the company a fresh start.

Stringer shrugged off the question on why he had not simply chosen a new president.

"Why do we need another executive in between me and this group?" he asked. "We do not need a bureaucratic layer."

Chubachi said he was making way for the next generation.

"Now is the time to prepare for the next stage of growth," he said.

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•  TWC pays off Time Warner; plans reverse stock split
•  OpenTV gets proposal from Kudelski
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•  Sony centers power at top in Stringer
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