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Sat, Sep 24, 2005 - Page 12 News List

New Sony boss' plan hackneyed, flimsy, analysts say


Howard Stringer, left, chairman and CEO of the Sony Corporation, and Sony president Ryoji Chubachi present the company's new Walkman Type A portable music player at a press conference in Tokyo on Thursday. Sony announced plans on Thursday to revitalize the company's economic health.


Sony's latest restructuring plan, aimed at putting the struggling consumer electronics giant back on its feet, got a skeptical response yesterday as analysts criticized its lack of substance and fresh thinking.

Sony boss Howard Stringer, drafted in to reverse the slump at the Japanese high-tech icon, announced 10,000 job cuts on Thursday and a swathe of asset disposals but crucially stuck with his vision of the group as an electronics to entertainment colossus.

He also issued its second profit-warning this year, forecasting a net loss of ¥10 billion (US$90 million) in the year to March 2006, largely owing to one-off costs linked to the restructuring drive, its new British-born chief executive said in the keenly awaited three-year business recovery plan.

The big set-piece announcement was seen as the first major test for Stringer, the first foreigner to take the helm at Sony in its six-decade history, but first reactions yesterday were less than encouraging.

Many questioned Sony's content-to-product strategy and the new plan disappointed those looking for a more radical departure at a company that is struggling with the likes of Apple, which marries style and high-tech sophistication in its must-have iPod music player.

Thursday's announcement was more "a general policy speech" by the new management, lacking in details and similar to earlier plans which have not worked, Nomura Securities analyst Eiichi Katayama told the Asahi Shimbun daily.

"The new management plan is similar to the previous plan issued in 2003. It lacks fresh and drastic growth strategies," he told the Asahi.

Nagao Fusako, analyst for Standard and Poor's, saw no significant change.

"We appreciate the planned reduction of the product line but a closer review of the plan is necessary to assess whether it will actually improve earnings," Fusako told Jiji Press.

"In the electronics segment, it is unclear whether the [plan] will result in improved product competitiveness and enhance the company's ability to deal with falling prices of digital appliances," she said.

Press comment was equally unenthusiastic.

"The new business plan ... fails to clarify key issues, such as the intended core of its mainstay electronics division and the type of business model it will use to turn a profit in that core operation," the Nihon Keizai Shimbun said in an analysis.

"While the plan does mention cost cutting and structural reorganization, it does not identify the non-strategic divisions that will be sold off or shut down," the paper said.

"The absence of such details makes it harder to assess if the plan will help Sony regain its competitive edge," Japan's top business daily said.

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