Sony Taps Apple Alumni for Board

Sony Corp. Chief Executive Officer Kazuo Hirai is trying to win back customers from Apple Inc. with new Xperia smartphones. Adding two former executives of the iPhone maker to Sony’s board next month may help.

Eikoh Harada, who spent seven years as head of Apple in Japan, and Tim Schaaff, who worked for the iPad maker until 2005, are nominated to become directors at Sony’s annual shareholder meeting on June 20.

Hirai cut jobs and sold assets to help the Tokyo-based company post its first annual profit in five years as consumers once drawn to Walkmans and Bravia televisions now flock to products from Apple and Samsung Electronics Co. Winning customers with Xperia handsets is key to his plan to revive Sony’s unprofitable electronics operations by bringing what he called “inspiration” to its hardware.

“It would help Sony to gain outside board members that have expertise in businesses that Sony is trying to strengthen,” said Koki Shiraishi, an analyst at SMBC Nikko Securities Inc. “It is common for a company to approach people with experience at a growth company.”

Sony nominated three directors to its board for approval by shareholders next month, replacing four that will retire, including board Chairman and former CEO Howard Stringer.

The third nominee, Joichi Ito, is a director of the Media Lab at Massachusetts Institute of Technology and also the New York Times Co.

Apple Sales

The additions to the board come as existing directors discuss whether to adopt billionaire hedge-fund manager Daniel Loeb’s proposal for an initial public offering of Sony’s entertainment business that includes a Hollywood movie studio and music operations. Talks on the plan from Loeb’s Third Point LLC, a Sony shareholder, are at an early stage and “it’s important that the board will discuss this and come to a decision that represents Sony’s stance,” Hirai said May 22.

Sony has jumped 6.9 percent since Loeb told Hirai that partially spinning off the entertainment assets would bring a higher valuation and raise cash for the company, whose movie studio topped the U.S. box office last year with hits including “Skyfall.” Film and financial services earnings have helped the company counter nine straight annual losses from making TVs.

While Sony’s smartphone unit is expecting 27 percent growth in shipments this year, it remains dwarfed by Cupertino, California-based Apple’s sales.

The Japanese company expects handset sales of 42 million units in the year ending March 31. Apple sold almost 48 million iPhones in the December quarter alone, according to data compiled by Bloomberg.

McDonalds Japan

Sony’s market share in the worldwide smartphone industry rose to 3.8 percent in the first quarter of 2013 from 3.6 percent a year earlier, according to data compiled by Bloomberg. Samsung and Apple together controlled 49 percent of sales.

Harada worked for Apple for 14 years, leaving in 2004 after spending his final seven years there as head of Japanese operations.

After leaving Apple, Harada joined McDonald’s Holdings Co. (Japan) as CEO to revamp the Japanese operations of the world’s largest hamburger chain. He shut about 600 unprofitable or small restaurants, upgraded the menu and lured customers through partnerships with NTT DoCoMo Inc. and Nintendo Co. for online services at outlets.

Digital Garage

Harada’s expertise and successful career at Apple, and his experience in businesses that face consumers directly, were some of the reasons he was nominated, Hirai told reporters at a May 22 briefing. Schaaff’s experience in Silicon Valley can help Sony as the electronics maker increasingly focuses on expanding network businesses, he said.

Schaaff joined Sony in 2005 from Apple, where he held positions including vice president of Interactive Media, according to the Japanese electronics maker. His contributions at Apple included managing the development and maintenance of the QuickTime platform, Sony said when he joined the company.

“I doubt Sony can catch up with Apple after all this time, it may be better to gain talents from a totally different field,” said Yuuki Sakurai, president of Fukoku Capital Management Inc. in Tokyo. “It’s hard to say whether these nominees will help Sony as it’s not very clear to investors where the company is heading.”

Schaaff stepped down as president of Sony Network Entertainment, the company’s online service, last year after attacks from computer hackers compromised customer information in 2011.

Ito is a co-founder of Digital Garage Inc., a Japanese online service company whose alliance partners include Twitter Inc.

Digital Garage also has a stake in Facebook Inc. through its investment arm. Akari Fukuda, a spokeswoman for Tokyo-based Digital Garage, declined to elaborate on the investments.

Before it's here, it's on the Bloomberg Terminal.