Sony CEO Hirai Says Plan to Revive TVs Ahead of Schedule
Sony Corp. (6758) earnings are “moving in the right direction” as Japan’s biggest exporter of consumer electronics accelerates a plan to turn around its unprofitable TV business, Chief Executive Officer Kazuo Hirai said.
Sony also is “mindful of our cash position” as it makes deals such as its Sept. 28 agreement to invest 50 billion yen ($639 million) in Olympus Corp. (7733), Hirai said at an industry exhibition near Tokyo yesterday. The Tokyo-based company is selling businesses, including a chemical products division for 57.2 billion yen, to generate cash, he said.
Hirai is reorganizing Sony’s business holdings as the company seeks to recover from four straight annual losses because of slumping demand for TVs, a stronger yen and competition from Samsung Electronics Co. and LG Electronics Inc. (066570) The CEO, who took over in April, vowed to stay in the TV business and promoted an 84-inch Bravia set that will start selling in Japan next month for the equivalent of $21,500.
“We’re certainly committed to the TV business,” Hirai said. “Sony has a very deep DNA in creating the best picture and the best sound.”
The new set uses 4K technology that Sony says displays higher-resolution images than conventional high-definition models. Sony sees growing demand for larger sets in developed markets such as North America and Japan, and better picture quality will help lure buyers, said Masashi Imamura, a senior vice president in charge of Sony’s home entertainment products.
Sony rose 0.3 percent to 931 yen as of 10:16 a.m. in Tokyo trading, paring its decline this year to 33 percent. Samsung has climbed 29 percent this year.
“I can’t be optimistic,” said Nobuo Kurahashi, a Tokyo- based analyst at Mizuho Investors Securities Co., who rates Sony neutral, or hold. “It’s possible that the TV revitalization plan may be ahead of schedule, as the targets may be conservative. However, it doesn’t mean that Sony as a whole is doing well.”
“Japanese consumer electronics makers have abandoned their old habit of lining up TVs to compare with each other whose is the biggest,” said Yoshiharu Izumi, an analyst at JPMorgan Chase & Co. in Tokyo. “Each company has a different message this year, depending on their expertise. For Sony, it’s the expertise used in high-end professional products leading to the new 4K set.”
Sony said in August its main TV operation may lose about 80 billion yen in the year ending March 2013, a ninth straight year of losses, adding to about 700 billion yen in losses since April 2004. Hirai is reducing the number of models and has sold stakes in display ventures as he tries to make the unit profitable in the year ending March 2014.
“We are ahead of plans in turning the TV business around,” Hirai said, without giving specifics.
“There are differences in product categories but, overall, I think we are moving in the right direction,” he said when asked about the company’s full-year earnings outlook.
The company sold its stake in a liquid-crystal-display venture with Sharp in June after the Osaka-based company turned to Taiwan’s Foxconn Technology Group for a capital alliance that included the sale of a stake in the venture.
Sony (005930) ended a similar panel venture with Samsung last year as part of its plan to trim losses at the TV unit. Hirai has said the sale of that stake to the South Korean company will save about 50 billion yen.
In June, Sony agreed with Panasonic to jointly develop TVs using organic light-emitting diode panels, or OLED, screens. The partnership, the first between the main TV operations at the two companies, is progressing smoothly, Hirai said.
Sony cut its annual TV sales target last month to 15.5 million units from 17.5 million units, citing a slowing global economy. The world’s No. 3 TV maker, behind Samsung and LG, is sticking to the annual target, Imamura said last week.
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