Sony names Hirai to replace Stringer as CEO

TOKYO/NEW YORK Wed Feb 1, 2012 3:40pm EST

Kazuo Hirai, President and Group CEO of Sony Computer Entertainment, presents the new Sony S tablet (R) and the P tablet during a news conference at the IFA consumer electronics fair in Berlin August 31, 2011.  REUTERS/Tobias Schwarz

Kazuo Hirai, President and Group CEO of Sony Computer Entertainment, presents the new Sony S tablet (R) and the P tablet during a news conference at the IFA consumer electronics fair in Berlin August 31, 2011.

Credit: Reuters/Tobias Schwarz

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TOKYO/NEW YORK (Reuters) - Sony Corp named Kazuo Hirai as chief executive, succeeding Howard Stringer at the helm of the iconic gadget maker as it struggles with persistent losses and stalled efforts to re-energize its once-dominant brand.

Hirai, a 28-year company veteran known for overseeing the phenomenal rise of the PlayStation gaming system in the United States, takes over as CEO and president on April 1.

Hirai, 51, was effectively anointed as Stringer's successor last March when he was promoted to head the company's consumer products and services businesses, which produce the bulk of Sony's $85 billion in annual sales.

"They've been grooming him for a while," said Dan Ernst, Hudson Square analyst. "I think he will carry on the plan for Sony -- as difficult as it is."

That plan hinges on turning around the company that has come under fire for losing the innovative edge behind products like the Walkman and Playstation, and ceding ground to rivals such as Apple Inc and Samsung Electronics as consumers snapped up their iPhones, iPods and Galaxy gadgets.

A chief concept in the strategy hinges on merging Sony's robust roster of entertainment properties -- including singers Kelly Clarkson and Michael Jackson, and the "Spider-Man" and "Men in Black" film franchises -- with its Vaio, Bravia and other electronics brands, in an effort to boost sales.

"He is fully on board with that plan," Ernst said of Hirai. "He implemented a lot of that in the PlayStation group and probably more than anyone at Sony."

Sony announced the changes ahead of its earnings report on Thursday, which is expected to show a net loss for the fourth year in a row as its TV division bleeds red ink.

The last year has been brutal for many Japanese companies, hit by a strong yen that hurt exports, and two natural disasters -- the March earthquake in Japan and record floods in Thailand.

Stringer will remain chairman of the company until June, when he will become chairman of the board of directors, a separate post that will not be directly involved in company management, Sony spokeswoman Mami Imada said. The are no plans to replace him in the chairman's role, she added.

The urbane Hirai will have to plot a course to revitalize the electronics giant as consumers lose interest in its products and gravitate instead towards smartphones and tablet PCs from other brand names.

Sony's shares have lost nearly two-thirds of their value since Welsh-born Stringer, who turns 70 later this month, took the helm as CEO and chairman in 2005 and the role of president in 2009.

In contrast, Apple shares have bounded ahead more than 1,000 percent, while Samsung, a maker of smartphones, flat panels and computer chips, is up more than 100 percent over the same period.

ANOINTED SUCCESSOR

Hirai made his name in the PlayStation video games division, once a key profit driver for Sony that fell into the red for four consecutive years until he took the reins and pulled it back into the black two years ago.

"The path we must take is clear," he said in a statement on Wednesday. "To drive the growth of our core electronics businesses -- primarily digital imaging, smart mobile and games; to turn around the television business; and to accelerate the innovation that enables us to create new business domains."

Stringer, a former journalist who ran U.S. broadcast company CBS, was brought in as a rare foreign CEO at a top Japanese company to shake things up and restore its innovative edge in consumer electronics. Many analysts, however, see his major achievement as cost cutting.

Stringer's restructuring efforts included selling off TV factories in Spain, Slovakia and Mexico and outsourcing more than half of its production to other companies, including Hon Hai Precision Industry, the contract electronics maker that also has Apple as its key customer.

In recent months, Sony exited an LCD panel joint venture with Samsung, which will allow it to procure screens for its TVs more cheaply.

It also agreed to buy out Ericsson's half of their smartphone venture for $1.5 billion to shore up its position in a market where Apple and Samsung have become leaders.

Sony's share of the flat-panel television market has been eroded by the rise of Samsung and a host of nimbler Asian players, while a hacking scandal last year undermined confidence in its management.

Many of Japan's other electronics titans have also stumbled in recent years. In the current reporting season, Nintendo and Sharp Corp both issued bigger-than-expected loss projections for the full year.

South Korean rivals such as Samsung have been particularly aggressive in investment and blessed with favorable currency movements, while Apple has stolen much of the innovative thunder that once emanated from Japan.

Sony reports third-quarter earnings on Thursday, when it is also due to brief the media on the management reshuffle.

Analysts polled by Thomson Reuters I/B/E/S gave a consensus forecast of just 8.8 billion yen ($115.41 million) in operating profit for the key October-December quarter, when consumers spend heavily on gadgets for year-end gift giving, and 8.2 billion yen for the full financial year to March.

Sony's shares listed in the U.S. rose 0.6 percent on Wednesday while its shares in Japan closed trading about 2 percent lower at 1364 yen. ($1=76.25 yen)

(Additional reporting by Reiji Murai, Nobuhiro Kubo; Writing by Franklin Paul, Editing by Ed Klamann, Gunna Dickson and Mark Porter)

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Comments (4)
jimmy6p wrote:
Sony needs another “Trinitron”. That patent made them a bundle, and gave them a truly unique position in the TV category.

Unless you’re hyper-critical, and know what to look for, most top brand hi-def screens look alike. Sony needs another exclusive.

Feb 01, 2012 4:47am EST  --  Report as abuse
VonHell wrote:
Not just a trinitron… (well, this would help its loss making tv business)
The way i see, Sony products lack innovation, pioneering and when they are the first on the market on something, they missed just one detail to make the thing become really nice…
For example: I m interested in the HMZ-T1, but they could at least had put some wireless like WHDI… i know HMZ it is great, but i cannot go few steps from the transmitter…

I own one sony 3D TV. Its nice, it was expensive, but is nothing “Ohh!” from Samsung…
They could have done a true 120Hz 3D screen and allow us 60Hz each eye at 1080P instead that 24Hz standard that make us watch confortable only at 720P… that would even justify a high price… but they missed…

I passed many sony products because they dont even put menu with option in other languages on products i was interested sold in Japan… why not something simple like english menu? who knows…

Japanese CEO would change all this?…mmm i doubt…

Feb 01, 2012 6:25am EST  --  Report as abuse
DwDunphy wrote:
What is required is a product that capitalizes upon integration. An iPod integrates your music collection as well as videos. An iPhone adds telecommunication. An iPad adds e-reader technology and large-scale internet apps. The “cloud” integrates all your data in one amorphous attic where you can access virtually anything from anywhere. In all these cases, it is about taking disparate technologies and putting them into a sleek and unified package.

What Sony needs to do is figure out the technologies that are still free-roaming and find a way to integrate them down into a single unit. Sony was the king for a long time because they mastered the big (large TVs prior to digital) and the small (the Walkman). It’s no longer about big and small. It’s about having the most (usages) in the fewest (units). Until they crack that fundamental nut, they’re going to be followers.

Feb 01, 2012 8:16am EST  --  Report as abuse
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