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Sony selects Stringer to revive growth

Sony Corporation chairman and CEO Hideyuki Idei, left, shares a joke with his successor Howard Stringer, center, and new president and COO Ryoji Chubochi, right, at a press conference in Tokyo yesterday. PHOTO: AFP

Sony Corp, the world's second largest consumer electronics company, named Howard Stringer as the first foreign chief executive in its 59-year history, turning to the head of the entertainment unit after the company's shares slumped 73 percent in five years.

Stringer, a 63-year-old US citizen, will replace Nobuyuki Idei, the Tokyo-based company said in a statement yesterday. Stringer, a former CBS television news executive who joined Sony in 1997, has been chief operating officer since November 2003.

Sony, the maker of Vaio computers and PlayStation video-game consoles, in January cut its profit forecast as competition from Samsung Electronics Co and Apple Computer Inc drove down prices.

The company's US$36 billion stock market value is similar to that of Apple, the maker of iPod music players, which has a ninth of Sony's annual sales.

"Shareholder discontent led to the change," according to Atsuto Sawakami, who oversees the equivalent of US$859 million, including Sony shares, as president of Sawakami Asset Management Inc in Tokyo. "I hope this management change will restore the old Sony, which was renowned for its advanced technology."

Shares of Sony gained 1.5 percent to ¥4,070 (US$38.79), the highest in eight months, at the 3pm close on the Tokyo Stock Exchange yesterday.

Ryoji Chubachi, 57, an executive deputy president, will take over from Kunitake Ando, 63, as Sony's president, the company's statement said. Ando and Idei, 67, will remain as advisers.

"The lack of focus on the right strategies and products has disappointed Sony investors," said Hisakazu Amano, who oversees the equivalent of US$383 million at T&D Asset Management Co in Tokyo. "A change in management will be welcomed."

Stringer would be the latest head of Sony, which was started by Akio Morita, Masaru Ibuka and Tamon Maeda in 1946.

Stringer, born in Wales in 1942, has a master's degree in modern history from Oxford University. He became a US citizen in 1985.

After almost 20 years at CBS/Broadcasting Group, he became CEO at Tele-TV in 1995 before joining Sony. Stringer helped arrange Sony's US$2.9 billion purchase of Metro-Goldwyn-Mayer Inc last September.

Ken Kutaragi, 54, will step down as Sony's executive vice president, while keeping his post as the head of the video games division.

Operating profit at Sony's consumer electronics division, which accounted for about 65 percent of the ¥7.5 trillion (US$71.8 billion) revenue in fiscal 2003, fell 23 percent in the most recent quarter as prices of digital cameras, PCs and other gadgets dropped.

The price decline may hinder Sony's pledge to boost operating profit margin to 10 percent at all divisions excluding its financial business by the year ending March 2007, through cost-cutting plans that include cutting 20,000 jobs and consolidating overseas businesses.

"We won't achieve it this year," Stringer said at a news conference yesterday afternoon. "It's worth leaving out there to fight for and improve management. We have to make Sony executives hungry."

Samsung Electronics posted about US$11 billion of net income last year, more than Sony has earned in the past 10 years.

"The market is watching if the new management can restore the Sony brand, which has regressed into an ordinary brand," said Fumiyuki Nakanishi, chief equity strategist at SMBC Friend Securities Co in Tokyo.
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