Sony Corp, whose shares fell to a seven-year low this month, tried to win back investor confidence by showing a new version of its PlayStation video game, pledging to cut costs and better track its finances.
Dubbed "PSX," the game is a version of the PlayStation2 with a built-in recordable disk drive to help users download games and video from the Internet. It will be sold in Japan later this year and overseas early next year. Chief Executive Nobuyuki Idei said his company will also close factories to improve efficiency and keep weekly accounts to better track performance.
"PSX is clearly aiming for this Christmas," said Richard Chu, an analyst with ING Securities Japan Ltd, who rates Sony shares at "reduce." The addition of the disk drive gives some idea of what kind of machine Sony will launch to replace the PSX, although it will not immediately affect earnings, he said.
Idei has faced investor criticism for reporting worse-than expected losses for the fourth quarter to March 31 of ?111 billion (US$927 million), almost triple some analysts' expectations.
Sony shares were unchanged at ?3,000 at the close of Tokyo Stock Exchange trading at 3pm today. The shares have lost two-fifths of their value this year.
To better track performance, Sony will provide group-wide results on a weekly basis for its management, Idei said. There will also be daily and monthly closing of the books.
The need for more efficient book-keeping measures may point to communications problems within the company, said ING's Chu.
"The internal weekly book closing doesn't really relieve investor concerns. Sony already has solid supply chain management, which allows it to monitor inventories daily," he added.
Sony also said today it will have capital expenditure of ?175 billion in its current business year. It plans to spend ?150 billion developing imaging devices and flat-panel screens, according to a statement released before a meeting with investors and analysts in Tokyo.
It expects a reorganization of its electronics business to cost ?130 billion, the statement said. The company plans to reduce the number of factories worldwide in order to become more efficient.
"Restructuring and transformation of the corporation are the fundamental goals we're pursuing," Idei said.
Idei has vowed to widen Sony's operating profit margins more than fourfold by 2006. Over the next three years, the company plans to spend ?1 trillion to develop products for high-speed Internet services, chips and technologies.
New products will be important to win investor confidence said Katsuaki Furutachi, who helps manage about US$1.2 billion in Japanese equities, including Sony shares, at Asahi Life Asset Management in Tokyo.
"It's time for the company to invest to strengthen its main business," Furutachi said.
"Sony has attracted investors by offering innovative products," in the past, he said. "Without new leading products, they will become a ordinary company."
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