Shakeup as firm enters fourth year of losses

Hirai Sony’s new CEO; Stringer out

Bloomberg

Sony Corp. has named Kazuo Hirai as president and CEO, replacing Howard Stringer, amid a projection for a fourth consecutive year of losses.

The change is effective April 1, Sony said in a statement Wednesday. Stringer will become chairman of the board after a shareholders’ meeting in June.

The promotion of Hirai, 51, will test his ability to carry out Stringer’s vision to integrate Sony’s TVs and computers with content from its entertainment businesses. Sony’s Walkman dominated portable players in the 1980s but has been overtaken by Apple Inc.’s iPod and failed to fend off Samsung Electronics Co. in the TV sector, while Nintendo Co. took the lead in video-game consoles. Sony is also forecasting an eighth consecutive year of losses at its TV business.

“Sony won’t change, whoever becomes president,” said Mitsushige Akino, who oversees ¥45 billion at Ichiyoshi Investment Management Co. in Tokyo. “Sony chose a foreigner, but that didn’t change the company. That proves how difficult it is. Sony has to reveal its new action plans to convince investors.”

Tokyo-based Sony, the maker of Bravia TVs, Vaio computers and PlayStation game consoles, in November predicted ¥90 billion in losses in the year ending in March, reversing an earlier forecast for a profit of ¥60 billion. Sony, which will report its third-quarter earnings Thursday, hasn’t had four consecutive years of losses since it was listed in 1958.

“The path we must take is clear — to drive the growth of our core electronics businesses,” Hirai said in the statement.

The new chief’s background is in the music and gaming industries, but he is being asked to lead a company whose stock has fallen by more than half its 2005 level.

Sony fell 1.9 percent to ¥1,364 in Tokyo trading Wednesday.

“It was my honor to recommend him to the board for the positions of president and CEO, because he is ready to lead and the time to make this change is now,” Stringer said in the statement.

Sony is revamping its main TV business, which is forecast to lose money for an eighth consecutive year because of the yen’s historic rise against the dollar and euro, as well as competition from Samsung Electronics Co.

Sony, which exited a display-panel venture with Samsung and bought out partner Ericsson AB’s stake in their mobile phone venture, has introduced new tablet computers and game consoles to take on Apple Inc. and try to revive profit.

“Sony’s TV business still faces challenges and the company is poorly positioned in the fast-growing mobile computing market, which Apple is now dominating,” Jeff Loff, an analyst with Macquarie Capital Securities in Tokyo, said before Wednesday’s announcement. “Its tablet offering is weak, and it has not yet introduced an Ultrabook product.”

Born in Tokyo on Dec. 22, 1960, Hirai grew up in Japan and the U.S., graduating from International Christian University in Tokyo in 1984 with a bachelor’s degree in liberal arts. He later joined a joint venture set up in Tokyo between Sony and CBS Inc. that became Sony Music Entertainment Inc., Sony’s main music unit.

Hirai was one of four top executives Stringer was grooming as his successor and the only one with no engineering background.

Hirai is “loyal on one hand and well-educated in the convergence products, and I think he has a charming personality,” Stringer told reporters in Tokyo last year.

Hirai, whose hobbies include cycling, driving and collecting cameras, watches, model railroads and telescopes, moved to Sony Computer Entertainment America in 1995 and became president of the U.S. unit in 1999. He became president of Sony Computer Entertainment Inc. in 2006, replacing Ken Kutaragi, who developed the PlayStation.

The company’s rating was slashed by Moody’s Investors Service last month and by Fitch Ratings in December, both citing the difficulty of turning around the unprofitable TV business. Moody’s, which assigned a negative outlook to Sony, also downgraded Panasonic Corp.’s rating.

Sony also has been hobbled by the March 11 disasters that crippled factories and flooding in Thailand that cut production. Sony was worth about $100 billion in September 2000, but is now valued at only $18 billion, compared with Cupertino, California-based Apple at $425 billion.