Sat, Feb 11, 2012 - Page 10 News List

Incoming Sony chief executive Kazuo Hirai vows ‘painful’ steps to cut costs

Bloomberg

Sony Corp’s incoming chief executive officer Kazuo Hirai has said he will make “a hard, painful decision” to cut costs in the TV business and supply chain, as the company faces its fourth straight annual loss.

“Pain can come in many ways,” Hirai, 51, told reporters in Tokyo on Thursday. “We have to make some hard decisions on where there are redundancies and reduce fixed costs in a variety of different areas.”

Hirai, who replaces Howard Stringer as Sony president and chief executive on April 1, said he was committed to TVs because they are “at the center of every entertainment experience.”

Sony, a trendsetter in the 1980s, predicts that it will lose money on TVs for an eighth consecutive year as consumers flock to devices from Samsung Electronics Co and Apple Inc for movies, music and games.

Sony, the world’s No. 3 TV maker, will invest in new technologies and improve its lineup of LCD sets, said Hirai, who is credited with reviving the PlayStation game business.

“Sony will have to cut jobs if it loses any more market share in TV,” Shiro Mikoshiba, an analyst at Nomura Holdings Inc in Tokyo, said before the interview.

Stringer streamlined the firm’s workforce, with personnel falling from 180,500 in 2008 to 168,200 last year, a contraction of 6.8 percent, the company’s Web site said.

Sony, once worth US$100 billion is now worth US$20 billion, according to data compiled by Bloomberg.

Shares fell 0.5 percent to ¥1,536 in Tokyo yesterday, trimming gains this year to 11 percent. Sony’s stock tumbled 53 percent last year.

The maker of Bravia televisions more than doubled its annual loss forecast last week to ¥220 billion (US$2.9 billion), blaming a stronger yen, production setbacks caused by floods and the cost of exiting a display-panel venture with Samsung.

Sony could drop its less-competitive businesses, Hirai said last week without elaborating.

The company is set to lose as much as ¥230 billion on TVs this fiscal year after lowering its sales target to 20 million sets from 27 million last year. It is writing down the value of some facilities, reducing the number of models and cutting marketing expenses in an effort to make the unit profitable by March 2014.

“It is very difficult to imagine Sony getting out of the TV business,” Hirai said on Thursday. “We have to obviously focus on pushing the envelope in coming up with new technologies.”

The company has cut sales forecasts on cameras, game consoles and personal computers, and said mobile phone sales were worse than expected.

Japan’s largest-consumer electronics exporter is looking to save money at its local operations and in the US and Europe, Hirai said.

The cost-cutting could also affect suppliers and manufacturers for Sony, which has had its credit rating cut by Moody’s Investors Service, Standard & Poor’s and Fitch Ratings since December.

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