Conglom topper promises cost cuts at confab
Sony Corp. chairman Howard Stringer warned against collapsing video windows and extolled Blu-Ray, as he promised investors and the press Friday that the beleaguered Japanese giant will rise again.
Gotham meet reprised a confab in Tokyo a week earlier where the new chief executive unveiled a corporate overhaul, including ¥200 billion ($1.8 billion) in cost cuts and the elimination of 10,000 jobs.
“If you collapse a window or go day and date…if you eliminate the movie theater, you’re doing movie of the week. And the sizzle…of the movie industry will be gone,” he said at a news conference at the Michelangelo Hotel. “You have to guard the value of the content.”
He said Blu-Ray — one of two competing formats for the next generation high-definition disc — has superior features “and potential for innovation down the road.” It had better, he said. “If you’re going to present consumers with a new disc and you have one shot at it.”
Hewlett-Packard and Dell recently came out in support of Blu-Ray. Apple’s in the Blu-Ray camp, as are studios Walt Disney, 20th Century Fox and, just announced over the weekend, Paramount.
Toshiba-backed rival format HD DVD, which Stringer called a “transitional technology,” is backed by Microsoft, Intel, Warner and Universal.
“This debate continues and I can’t give you a real clue about how it will end,” he said. Meanwhile, Sony’s installing the technology in its hotly anticipated PlayStation 3 coming out next year.
The format battle is one of several major question marks at the giant Japanese conglom whose flailing electronics business is generating streams of red ink and souring investors, who have knocked Sony’s stock down 15% this year alone.
Sony cleaned house earlier this year, ousting chief Nobuyuki Idei and installing Stringer, a Welsh-born former CBS News producer who had been overseeing Sony’s U.S. operations.
Stringer’s working closely with electronics head Ryoji Chubachi who was by his side in Tokyo and New York.
“I was sweating heavily at nights” after getting the job, Stringer said, “wondering how I could have any credibility in Tokyo. The only reason I’m cheerful, given the line of work, is because I have a partner I trust and enjoy,” he said.
“I can’t tell Dr. Chubachi what products to make, but I can go out and motivate. When a company starts to be confident good things happen,” he added. “The studio was moribund seven or eight years ago. Now it’s full of confidence.”
It’s been a lackluster summer for SPE, but “It’s having a great fall,” he said, touting upcoming pics “The Da Vinci Code” and “Memoirs of a Geisha.”
He joked that Chubachi “said we can never get (“Geisha”) right. That we should have all Japanese actors. I said, ‘For god’s sake, “Robin Hood” had Errol Flynn. How the hell do you think I felt?”
In response to a question about spinning off Sony’s U.S. entertainment biz — which was recently enhanced by the addition of MGM — Sony Corp. of America chief financial officer Rob Weisenthal noted that “unlocking value in entertainment is always an option for this company” — but that for now, the focus is on electronics.
“Sony was brilliant in standalone devices” that couldn’t compete in a wired world, Stringer said Rivals proved “more agile and nimble” than Sony’s “cumbersome and labored structure.”
He promised to break down the “silo” mentality that “impeded cooperation and communication.”
Sony, for example, failed to launch a portable music player before Apple’s iPod swept the market. “We tried to create the most complex and secure system ever made to distribute music, and Apple stepped right in,” Stringer said.
Stringer and Chubachi reiterated that the key to Sony’s turnaround will be recapturing the television market, where competitors had moved in with lower priced quality sets. Stringer noted that flat screens are only 10% of the U.S. market, giving Sony a chance to take the lead.
“We’re short of credibility with all of you. We know we have to earn your trust,” Stringer said.