Incoming Sony Corp. Chief Executive Officer Kazuo Hirai’s biggest challenge will be to solve a puzzle that bedeviled Howard Stringer for eight years: how to make money selling televisions.
Japan’s largest electronics exporter said Wednesday that Hirai, 51, will succeed Stringer, 69, in April. Sony’s TV business may lose ¥175 billion this fiscal year, adding to the ¥480 billion in accumulated losses since 2004.
Sony has lost ground to South Korea’s Samsung Electronics Co. and LG Electronics Inc., both of which sell TVs profitably.
“The most pressing issue is to turn around the TV business,” said Ryosuke Katsura at Mizuho Securities Co. “Then he can prove to investors that he can make a change, but investors are skeptical how much he can do.”
Hirai established his reputation by turning around Sony’s PlayStation unit and edged out three other candidates with engineering backgrounds for the top job.
“The path we must take is clear: to drive the growth of our core electronics businesses — primarily digital imaging, smart mobile and games; and to turn around the television business,” Hirai said.
Sony is revamping the main TV business that is forecast to lose ¥262.5 billion in the two years to March 2013. An appreciating yen that damps the repatriated value of Sony’s overseas sales and weakening consumer demand has prompted Sony to forecast an unprecedented fourth consecutive annual loss in the year to March.
“Japanese TV makers are facing too many troubles; the stronger yen, falling prices, sluggish demand and sliding market share due to competition,” said Yoshihiro Okumura at Chiba-Gin Asset Management Co. in Tokyo. “If they can introduce a hit product or a next-generation product, then the situation may change.”
Sony, whose stock has slid by more than 60 percent since Stringer took the helm in June 2005, fell 0.2 percent to $18.19 in New York trading on Wednesday, after the announcement. The stock slumped 53 percent last year, lagging behind a 26 percent jump for Apple Inc. and an 11 percent gain for Samsung.
Sony has launched new tablet computers and game devices to take on Apple and revive profits.
Sony’s credit rating was cut by Moody’s Investors Service last month and Fitch Ratings in December. Sony has been hobbled by a yen that reached a postwar high, waning sales, a megaquake that crippled factories and Thailand flooding that cut production. Sony was worth $100 billion in September 2000, but is now valued at $18 billion.
“There was such a huge expectation when Sony announced its first foreign CEO,” said Koji Toda, chief fund manager at Resona Bank Ltd. in Tokyo. “Hirai needs to rebuild Sony so that the company can produce something that cannot be copied by others. Sony was once such a company.”