Business / Corporate

Sony CEO Hirai's strategy questioned by former executive Iba

by Grace Huang

Bloomberg

Kazuo Hirai is being criticized by a former Sony Corp. director who says the company’s chief executive officer is abandoning its traditional engineering focus.

Sony’s electronics business is central to its long-term success, Tamotsu Iba, 79, a former chief financial officer and vice chairman, wrote in a letter sent to management on Monday. Iba, who also sent two other missives earlier this year, wants Sony executives to address his questions about executive compensation and Hirai’s leadership during a June 23 shareholder meeting.

Iba says Hirai’s strategy runs counter to Sony’s “Founding Prospectus,” handwritten by cofounder Masaru Ibuka in 1946. The document describes “a stable workplace where engineers could work to their hearts’ content in full consciousness of their joy in technology.”

Iba met with Hirai and other Sony executives in April without getting answers to all his questions, he said.

“Sony used to be a unique and extraordinary company,” Iba wrote in the letter, a copy of which was provided to Bloomberg News. “During the past 10 to 20 years, Sony spirit for innovation has been diluted, and as a symbol, the Sony brand has become weak.”

George Boyd, a spokesman for Sony in Tokyo, declined to comment in an email message.

Shares of Sony declined 1 percent to ¥3,822.50 at Monday’s close in Tokyo, paring the advance this year to 55 percent. The benchmark Topix index has gained 19 percent in the period.

Before becoming CEO in 2012, Hirai led the game division that makes PlayStation consoles. Since his promotion, Sony’s workforce has shrunk by more than 20,000 people while the company’s share price has more than doubled.

“Sony’s electronics era has ended, it is heading down the hill and success is hard to repeat,” said Mitsushige Akino, executive officer at Ichiyoshi Asset Management Co. in Tokyo. “Sony used to be a global standard in the hardware era, that is what Japanese manufacturers are good at. But now it’s a software era.”

Iba said the departures in recent years of innovative engineers, including those labeled as strange or weird, has weakened Sony at a time Apple Inc. and Samsung Electronics Co. dominate the mobile market with a succession of gadgets.

“The road to revive the bright electronics business might be distant,” Iba wrote. “But I would not give up, and would continue to promote the reform of the electronics business for revival in the coming year.”

Hirai forecast in February that operating profit will climb to ¥500 billion in the year ending March 2018. That’s the highest since 1998. Sony also aims to restore its dividend, which it scrapped in September for the first time since listing in 1958.

Iba cast doubt on the mid-term targets, citing a lack of detailed plans and management’s insensitivity to low motivation among Sony employees. The letter also urged shareholders to hold management accountable for failures to meet earlier goals and establish a succession plan.

Iba vacated the CFO’s position in 2000, when Sony was the market leader in several electronics segments. He expressed his hope Monday of reviving Sony’s electronics prowess, and again cultivating the sort of engineering vision that once catapulted the company to the industry’s pinnacle.

He cited Xerox Corp. and Apple as examples of troubled companies that rediscovered their way.

“It seems that the bright era for Sony group has passed,” Iba said. “But I believe that it is still possible to revive the brightness in electronics business as of now.”

GET THE BEST OF THE JAPAN TIMES
IN FIVE EASY PIECES WITH TAKE 5