Shareholders approve management restructuring
Howard Stringer already had his hands full trying to return Sony to profitability. But now he’s doing so with a more powerful position.
Sony’s shareholders approved a management restructuring Friday that adds prexy stripes to Stringer’s chairman and CEO titles at the Japanese entertainment and electronics giant.
Stringer, 67, is tackling a steep downturn in Sony’s core electronics business, which includes TVs, cell phones, Walkman music players, Vaio computers and other hardware like the PlayStation 3. The electronics slump led to the company’s first fiscal year loss in 14 years.
It’s expecting another bad fiscal year through March, and to help improve those numbers, Stringer is restructuring and cutting costs, including eliminating 16,000 jobs worldwide and closing factories — an effort that will save $3.1 billion this year.
His new title gives him the ability to make such decisions quickly.
Ryoji Chubachi had previously served as prexy but resigned. He will remain a director and become vice chairman, overseeing product quality and Sony’s environmental policies. He had been shepherding the struggling electronics biz.
Other management moves include making Masao Morita, the son of Sony co-founder Akio Morita, the head of Sony’s music and movies operations in Japan.
Kazuo Hirai continues to head up Sony’s videogame division, which includes the PlayStation console biz.
On Friday, Stringer told a room of 8,300 shareholders in Tokyo that he’s focused on bringing together Sony’s movie, TV, music, videogame and semiconducter businesses to develop more products and services for the digital age.
“We’re working on profit recovery and growth strategy. That’s what we’re committed to,” Stringer said.
That includes adding wireless connectivity to its devices; such rivals as Apple and Samsung have already benefited from implementing such a change.
“In the 20th century, this company created great champion products,” Stringer told shareholders. “In the 21st century, other companies took our hardware like the Walkman and added network capability and turned it into the iPod. We are not going to be beaten again in the network age.”
Sony still needs to figure out a way to make its $400 PlayStation 3 more of a must-have in households and keep gamemakers happy.
Activision’s very vocal topper, Bobby Kotick, last week raised eyebrows when he told the Times Online that his company, behind the popular “Guitar Hero” and “Call of Duty” franchises, may stop making games for the PS3 next year if Sony doesn’t boost sales of the console.
“They have to cut the price, because if they don’t, (the number of games each console owner buys is) likely to slow,” Kotick said. “It’s expensive to develop for the console, and the Wii and the Xbox are just selling better. Games generate a better return on invested capital on the Xbox than on the PlayStation.”
Sony has yet to give in on any price cuts for its PlayStation and isn’t likely to as the console gains momentum in some territories.
But generally speaking, all aspects of how the company’s run are on the table.
“We have not finished (with our restructuring efforts),” Stringer said. “We have a long way to go.”