* Sony sees 4th straight annual loss
* Hirai to take over as CEO from Stringer in April
* Q3 net loss 159 bln yen, TV revenues slide
* To write down 63.4 bln yen on Samsung LCF panel venture
* Sony shares down 2.6 pct, Nikko up 0.8 pct
By Nathan Layne and Yoko Kubota
TOKYO, Feb 2 Ailing Japanese electronics
giant Sony Corp warned it was heading for a
bigger-than-expected $2.9 billion annual loss, presenting a
daunting task for incoming CEO Kazuo Hirai, who vowed to move
quickly to turn things around.
Overtaken by more innovative rivals such as Apple Inc
and Samsung Electronics over the past
decade, Sony posted a $2.1 billion net loss for
October-December, normally a strong quarter boosted by year-end
holiday sales, as it battled a strong yen, flooding in Thailand
that ruptured supply chains, and a weak economy.
It also took a one-off charge for exiting a flat panel joint
venture with Samsung, and said sales dropped 17 percent to 1.82
The forecast for a 220 billion yen ($2.9 billion) net loss
for the year to March, Sony's fourth straight year of red ink,
was close to double what the market expected, and revealed the
task ahead for Hirai, who replaces Howard Stringer as CEO in
Hirai, a 51-year old Sony veteran known for reviving the
PlayStation gaming operations through aggressive cost-cutting,
said he would not hesitate to scale back or withdraw from
businesses if they were not competitive.
"I have a very strong sense of crisis about the environment
surrounding us," Hirai told a news conference. "We cannot be
afraid to make painful choices for the future of Sony. Our
rivals and the operating environment won't wait for us."
There is unlikely to be a honeymoon period for Hirai, who is
under immediate pressure to sort out the ailing TV business
after it fell behind South Korean rivals such as Samsung in a
market where prices are tumbling.
Above all, Hirai will strive to recapture the innovative
flair that led Sony to come up with the Walkman personal
music-player in the 1980s and the PlayStation in the 1990s, and
regain ground lost since then to Apple and Samsung whose
iPhones, iPads and Galaxy gadgets are snapped up by consumers.
Some analysts believe Hirai -- 51, tall, urbane and a fluent
English speaker -- can rekindle the flame, saying he has a good
grasp of the overall business and is likely to know how to break
down its silos and integrate its divisions.
Others are less optimistic about his chances.
"It won't be easy for Sony to regain its lost ground under
new leadership, as its overall competitiveness has sharply
weakened," said Kim Young-Chan, analyst at Shinhan Investment
Corp in Seoul.
"It's got structural problems that will take years to fix.
"It's not just Sony, but Japanese IT firms have similar
problems. They are failing to innovate and produce
industry-leading products in almost every major area - from TVs
to displays, tablets and smartphones."
A chief concept in Hirai's 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 said the TV business would be crucial to this
"convergence" strategy, brushing aside suggestions it may need
to pull out of the market even with the business set to lose
220-230 billion yen this financial year.
"There's still a chance in home electronics and I don't
think Sony should quit TV's, but unfortunately I can imagine the
day may come when they will pull the plug on the business," said
a former engineer and executive at Sony.
"This is because when you keep making losses and you have no
fresh ideas, that becomes the easy choice."
Chief Financial Officer Masaru Kato said Sony aimed to halve
losses on flat TVs in the next financial year from April, when
as a company it hopes to make an operating profit of about 200
Hirai singled out medical as a potential core business for
the future, but he declined to comment on any possible
investment in troubled endoscope maker Olympus Corp.
Welsh-born Stringer, a former journalist who ran U.S.
broadcaster CBS, was brought in as a rare foreign CEO in Japan
to shake things up, but many analysts see his major achievement
Sony's shares have lost nearly two-thirds of their value
since Stringer, who turns 70 this month, took the helm as CEO
and chairman in 2005.
Stringer sold off TV factories in Spain, Slovakia and Mexico
and outsourced more than half of its production to other
companies, including Hon Hai Precision Industry, the
contract electronics maker whose key customer is Apple.
Recently, Sony exited an LCD panel venture with Samsung,
enabling it to obtain 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.
Hirai was effectively anointed as Stringer's successor last
March when he was promoted to head Sony'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."
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 the Thai floods.
Stringer said those disasters and the Lehman shock of 2008
had hit Sony hard and masked much of the progress made during
"If we hadn't reformed Sony as we did, can you imagine where
we would be today," Stringer said. "I rest my case."