Mon, Apr 16, 2012 - Page 10 News List

Sony recovery plan ‘no great shakes’: experts

‘SELECT AND FOCUS’:Analysts said Sony’s new strategy was totally predictable, and not anything that looks likely to reverse falling sales

AFP, Tokyo

Sony has little chance of winning back its reputation as an innovator or vaulting ahead of stronger rivals with the “ordinary” turnaround plan its new chief unveiled last week, analysts said.

On Thursday, the firm’s leader Kazuo Hirai said the “urgent” revamp of Sony’s business would cost nearly US$1 billion this year and mean 10,000 job cuts, as it looks to staunch multi-billion dollar losses.

Hirai outlined a blueprint to slash costs at Sony’s struggling TV division, while boosting the image of its Bravia TV brand.

Sony’s reforms, in addition to cutting about 6 percent of its workforce, also include expanding its PlayStation and online games business, as well as pushing further into emerging markets and new sectors, such as medical equipment and life sciences.

Hirai said it is urgent for Sony to strengthen its core businesses while rebuilding TV business, but his plan received a collective yawn from analysts, while unimpressed investors pushed Sony shares about 5.5 percent lower on Friday amid doubts it would be enough to save the company that invented the Walkman.

“I had been expecting no surprise and, as expected, it turned out to be no great shakes,” said Nobuo Kurahashi, analyst at Mizuho Investors Securities. “It was the ordinary ‘selection and focus’ strategy ... It only gives us uncertainty when the company puts the fields where it is losing at the center of its business strategy. We cannot have high hopes at the moment.”

A consumer electronics analyst, who spoke on condition of anonymity, said Sony had little choice but to focus on consumer gadgets such as the video game offerings for which it was once synonymous.

“They are the areas that have growth and profit potential,” he said. “[However] it would be difficult to give consumers the same impact as the one that PlayStation had when it first hit the market … The company needs to show how it will differentiate its products [from rivals].”

Sony, along with Japan’s other electronics giants such as Panasonic and Sharp, has been fighting a losing battle for years against fierce competition offered up by rivals including South Korea’s Samsung and US-based Apple.

Falling prices, particularly in the TV segment, have eaten away at their bottom line as a strong yen made their products more expensive overseas while a stuttering global economy also hit sales.

“Sony lacks the scale of Samsung. It lacks the cost edge of Samsung and [Taiwanese smartphone maker] HTC,” N. Venkat Venkatraman, a professor at Boston University’s School of Management, said about the plan in printed remarks.

“It needs to develop a vision of media and entertainment to rival Apple and deliver it at a price point that is acceptable to the growth markets [India and China],” he said.

While Sony still generates profits in some areas, such as electronics parts, critics have accused the company of various strategic blunders over the years, including being late to enter the LCD panel market.

Now, with Sony facing a record full-year loss of ¥520 billion (US$6.4 billion) in its latest fiscal year, analysts are questioning Hirai’s goal to boost revenue to ¥8.5 trillion by 2015, up nearly 20 percent from ¥7.18 trillion last year.

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