Sony Corp's Kunitake Ando will share a Las Vegas stage next month with Bill Gates and John Chambers, a coming out of sorts for the man charged with recovering US$42 billion of market value lost in a year.
The Microsoft Corp and Cisco Systems Inc executives join Ando as keynote speakers at COMDEX, the largest gathering of computer and telecommunications companies. He'll need to convince investors he can emerge from the shadow of co-head Nobuyuki Idei, who addressed the show in 1999, and revive the second-biggest consumer-electronics maker even as the global economy slows.
"Speaking at COMDEX is quite a status symbol," said Katsushi Shiga, principal analyst at Gartner Group Japan KK. "It is a good chance for him to show he's on a par with Idei."
Ando, 59, has his work cut out at a company that has twice slashed its outlook for this fiscal year. Sony expects a profit of ?10 billion (US$81 million) in the year ending March 31 -- less than a tenth of what it earned two years ago -- on sales of ?7.5 trillion.
Investors question whether the Tokyo-based company can meet even those lowered expectations, especially after last month's terrorist attacks in the US.
Sony yesterday reported an unexpected loss in the second quarter of ?13.2 billion on sales of ?1.79 trillion. That compares with a profit of ?18.7 billion and sales of about ?1.69 trillion last year.
The number one culprit: Sony's electronics business, which Ando led between 1997 and June 2000. The division, which makes products ranging from digital cameras to cellphones, had losses for the past three straight quarters. The electronics business, which accounts for about three-quarters of Sony's sales, had an operating loss of ?24.9 billion in the second quarter.
"What Sony's management should do is steer the company back to its original business -- the electronics business," said Nobuaki Murayama, who manages 60 billion yen in assets at Cigna International Investment Advisors KK. "In that sense, Mr. Ando may help."
Ando is the unseen face of Sony, a company whose operations cover everything from online banking to movies. Ando joined Sony in 1969 after graduating from the University of Tokyo's School of Economics and has served in a number of positions. Most notably, he was president and chief operating officer of Personal IT Network Co, overseeing Sony's re-entry to the personal computer market with the Vaio series of computers.
Most of Ando's time at the maker of Wega and Trinitron televisions has been spent toiling outside the spotlight of Idei, a man handpicked by Norio Ohga, Sony's second president.
Idei, who logs thousands of miles each year pitching Sony's vision worldwide, is one of the best-known Sony executives outside Japan. He serves as a General Motors Corp. board member and in Japan sits on a government panel charged with reviving his home country's information technology industry.
After the terrorist attacks in the US last month, it was under the names of Idei, Ando and Chief Financial Officer Teruhisa Tokunaka than an e-mail was distributed, urging company employees to stand firm even as global economic conditions deteriorate, a company spokesman said.
"I call myself Chief Implementation Officer," Ando told Bloomberg News in an interview. "Idei has a splendid long-term view. It's my role to realize his vision."
That vision, which Ando will outline at COMDEX, calls for Sony's products to link with the Internet, giving the Japanese consumer-electronics maker countless repositories into which it can pump a steady stream of movies, games and services.
Ando is a believer, repeating Idei's mantra at a March news conference that the ``broadband age,'' when everyone is linked to the Internet at high speed, is just around the corner.
Investors have their doubts. Sony's shares have lost half their value since Ando's appointment as president and chief operating officer in June last year. In the past 12 months, the shares have fallen about US$46, shaving US$42 billion from Sony's market value.
According to a US spokesman, Ando is called Kuni by his US staff and is known for his breezy nature with employees, even holding meetings with US staff in August last year wearing casual attire -- an unusual step for a senior Japanese executive.
It was at those meetings when Ando said he first sensed something was wrong with the US electronics market and Sony's sales of Vaio computers, which seemed to be sagging. The US accounted for 31 percent of Sony's sales in the first quarter.
"I told the [US Vaio staff] never to let inventories build up," Ando recalls. Yet he failed to gauge the extent of the problems in the US because Vaio sales "were in full swing in Japan, as were sales of other audio and visual goods."
Granted, not all Sony's problems are Ando's doing. The company is mired in the same meltdown that's stuck technology giants such as Intel Corp, which plans to phase out its consumer-electronics group, and Compaq Computer Corp, which reported a third-quarter loss of US$499 million earlier this week.
All the same, Ando and Idei readily admit the consumer-electronics maker failed to act quickly enough to adjust for deteriorating global economic conditions.
"We were a bit slow to start taking reorganization steps," Ando says.
The maker of the Sony Walkman has also been beset by sagging prices for products like disk drives and cathode-ray computer monitors.
The company scrapped its e-Villa Internet access terminal in the US just weeks after its debut, while its Clie handheld computer, released in August last year in Japan, failed to find a following until the device was revamped with a brighter screen and more functions.
There have also been miscues and manufacturing glitches. The release of Sony's PlayStation2 video-game console in the US last year was scaled back because of a problem manufacturing one of the device's key components. Sony last month said it expects a loss of about ?40 billion at its cellular-phone business in the six months to September after faulty software forced a recall of as many as 1.1 millions handsets.
Worse for the maker of the PlayStation2 video-game console, its 61-percent owned Aiwa Co subsidiary yesterday said its fiscal second-quarter loss widened as it sold fewer mini-disc players, televisions and electronic products outside Japan. To make up for lost time, Sony said last month it will reduce its workforce by offering early retirement and scrap or scale back 48 businesses. It also hopes to cut parts procurement costs by 15 percent this year, saving about ?300 billion.
"It doesn't matter what Ando or anyone at Sony does," said Jun Terasaka, a senior fund manager at Toyota Asset Management Co, which manages ?20 billion in equities and who is adding electronics makers and electronics components makers to his portfolio. "Sony isn't a high-growth stock anymore. It is a cyclical stock, whose earnings are dependent on Japan's economy recovering."
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