Japan’s largest electronics exporter said yesterday that Hirai, 51, will succeed Stringer, 69, in April. Sony’s TV business may lose 175 billion yen ($2.3 billion) this fiscal year, adding to the 480 billion yen in losses since 2004.
Sony has lost ground to South Korea’s Samsung Electronics Co. (005930) and LG Electronics Inc. (066570), both of which sell TVs profitably. The Tokyo-based company and fellow Japanese television makers Sharp Corp. and Panasonic Corp. have been crippled by the strength of the yen, which forced Sharp to predict a record $3.8 billion loss yesterday.
“The most pressing issue is to turn around the TV business,” said Ryosuke Katsura, analyst 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, who worked in the company’s music and entertainment divisions, established his reputation by turning around Sony’s PlayStation unit and edged out three other candidates with engineering backgrounds for the top job.
Born in Tokyo on Dec. 22, 1960, Hirai grew up in Japan and the U.S., graduating from the International Christian University in Tokyo in 1984 with a bachelor’s degree in liberal arts.
After graduation, he joined a joint venture set up in Tokyo by Sony and CBS Inc. The business later became Sony Music Entertainment Inc., Sony’s main music unit.
Hirai, whose hobbies include cycling, driving, as well as 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 was promoted to president of Sony Computer Entertainment Inc. in 2006, replacing Ken Kutaragi, developer of the PlayStation.
“The path we must take is clear: to drive the growth of our core electronics businesses - primarily digital imaging, smart mobile and game; to turn around the television business and to accelerate the innovation that enables us to create new business domains,” Hirai said in a statement.
The Japanese company is revamping the main TV business that is forecast to lose 262.5 billion yen in the two years to March 2013 because of a strengthening yen against the dollar and euro, and competition with rivals including Samsung.
An appreciating yen that damps the repatriated value of Sony’s overseas sales -- while a weakening won inflates Samsung and LG’s -- and weakening consumer demand has prompted Sony to forecast an unprecedented fourth consecutive annual loss in the year to March. The company will discuss the health of its TV business while reporting its third-quarter earnings today.
“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, who helps manage the equivalent of $365 million 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.”
The maker of Bravia televisions, Vaio computers and PlayStation game consoles may project a wider loss than predicted three months ago, according to analysts’ estimates compiled by Bloomberg. Sony in November said it may have a 90 billion yen loss in the year to March. That compares with the 147 billion yen average loss projected by 18 analysts. Sony hasn’t had four consecutive years of losses since it was listed in 1958.
Sony, which 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 yesterday, after the announcement. The company’s Tokyo shares weren’t traded today as the Tokyo Stock Exchange suspended trading of 241 companies because of a computer glitch.
“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, which exited a display-panel venture with Samsung and bought out partner Ericsson AB’s stake in their mobile-phone partnership, has introduced new tablet computers and game devices to take on Apple and try to revive profit.
Sony’s rating was cut by Moody’s Investors Service last month and Fitch Ratings in December, with both citing the difficulty of turning around the unprofitable TV business. Moody’s, which assigned a negative outlook to Sony, also downgraded Panasonic Corp. (6752)’s rating.
Sony has been hobbled by a yen that reached a postwar high, waning sales, a Japan earthquake that crippled factories and Thailand flooding that cut production. Worth $100 billion in September 2000, Sony is now valued at $18 billion, compared with Cupertino, California-based Apple at $425 billion.
The world’s No. 3 TV maker lowered its annual sales projection to 20 million sets from 22 million in November and said it was taking a 50 billion yen charge for streamlining the TV operation.
The company is countering with plans to write down the value of some facilities, reduce the number of models and cut expenses at its marketing units.
“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, which oversees the equivalent of $68 billion. “Hirai needs to rebuild Sony so that the company can produce something that cannot be copied by others. Sony was once such a company.”
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