Sony's Comeback

Sony chief to outline plan to revive ailing icon

Agence France-Presse

TOKYO -- Sony chief executive Howard Stringer unveils a three-year plan Thursday aimed at reversing a slump at the Japanese electronics icon, in the first major test for the British-born former journalist.

The 63-year-old executive, the first foreigner ever to take the helm at Sony, is expected to focus on the company's core electronics division, which has been mired in losses for the past two years.

While further cost cuts seem likely, analysts say Stringer must also reverse a slump in sales to secure the future of the sprawling electronics and entertainment conglomerate, which was born from the ashes of World War II.

Though it is also known for movies and music, the company which brought the world the transistor radio, Walkman and PlayStation still relies on electronics for 70 percent of its 67 billion dollars in annual sales.

But it is now lagging behind rivals such as Sharp and Panasonic brand-maker Matsushita in the television market and struggling to challenge Apple's lead in the market for digital music players.

Stiff price competition and loss of market share to rivals saw Sony post its first back-to-back quarterly loss in the three months to June and drastically slash its forecast for the year.

"What the market is hoping is that they clearly show concrete steps to improve their electronics business," said Mitsuhiro Osawa, an analyst at Mizuho Investors Securities.

While cost cuts, layoffs and the sale of non-core businesses would help boost profitability, investors also want to know how Sony will boost sales.

"Sony's previous business plan seemed to focus on costs and less on the product line-up," said Osawa.

In 2003 the company announced 20,000 job cuts over three years as part of a "Transformation 60" plan to trim costs and put its media, entertainment and electronics units on the same path ahead of its 60th anniversary in 2006.

The company is now considering floating its financial unit but has denied reports it is planning to sell the subsidiary, as well as a stake in a satellite broadcaster, in a move that could lead to substantial layoffs.

However, Sony declined to comment on reports that it would stop development of new picture-tube television models and reorganize assembly plants in 11 countries abroad, including the United States, to switch to flat TVs.

Welsh-born Stringer, or "Sir Howard" as he is known since being knighted by Queen Elizabeth II in 1999, has a hard act to follow.

The only other foreign executive to head a major Japanese company was Carlos Ghosn, the Brazilian-born Frenchman credited with turning around Nissan Motor after his appointment in 1999 when France's Renault took a controlling stake.

At the company's annual general meeting in June, Stringer was asked by a shareholder about his proficiency in Japanese. He replied that he was a foreigner "but first and foremost I am a Sony warrior."

Sony's meteoric rise began almost 60 years ago in Japan's bombed-out capital when Akio Morita and Masaru Ibuka founded a company to repair damaged radios.

Its first product was a rice-cooker. It went on to bring the world myriad other gadgets, becoming a global icon and symbol of Japan's post-war technological might.