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Wed, Sep 21, 2005 - Page 12 News List

`Welsh Warrior' arrives to tackle Sony Corp's slump


Sony turned the staid world of Japanese business on its head six months ago by appointing its first foreign chief executive in a bid to arrest a dramatic slump at the electronics icon. Now Sony's "Welsh Warrior," Howard Stringer, is about to show his mettle.

Stringer, 63, jetted in from his US base to a plush Tokyo hotel where he will tomorrow unveil his plan to revive the business after its first back-to-back quarterly losses in four years.

Whether his strategy will be quite as dramatic as Sony's decision to hand the helm to a former television journalist who speaks no Japanese and has little hands-on experience in consumer electronics remains to be seen.

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."

Welsh-born Stringer, or "Sir Howard" as he is known since being knighted by Queen Elizabeth II in 1999, may already be sharpening his knives.

Analysts say further cost cuts seem inevitable but the Welsh-American must also help Sony recapture some of the energy and innovation that seem to have waned in recent years, marrying its strengths in electronics and entertainment.

The company is 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.

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 then brought the world the transistor radio, Walkman, Handycam, PlayStation and myriads of other gadgets, becoming a global icon and symbol of Japan's post-war technological might.

Nowadays Sony, which employs over 150,000 people worldwide -- 50,000 in Japan -- is also known for movies and music, but it still relies on electronics for 70 percent of its whopping US$67 billion in annual sales.

This is also the area in most urgent need of attention from Stringer who will be joined tomorrow by Sony's president Ryoji Chubachi and chief financial officer Nobuyuki Oneda.

"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.

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

Intense price competition and loss of market share to rivals in lucrative sectors such as televisions has left Sony's core electronics business mired in loss for the past two financial years.

Stringer, previously head of Sony's US subsidiary, is expected to adopt a two-pronged strategy, squeezing costs while also trying to boost revenue, not to mention improving communication between the company's warring fiefdoms.

In 2003 his predecessor Nobuyuki Idei 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 birthday next year.

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