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Sony gaming chief eyed for CEO

Hirai promoted to VP, wil lead new division

Sony topper Howard Stringer on Thursday ended months of speculation about who might be on the short list to succeed him by naming top gaming exec Kazuo Hirai to head a new consumer products division.

Stringer, speaking in Toyko, wouldn’t go as far as to call Hirai a shoe-in for CEO, but he did characterize Hirai as the lead candidate whom the Sony board will be watching closely in the next several months. Stringer’s current contract is said to expire in 2013.

The Welsh-born Stringer, a former head of CBS News, was the first non-Japanese chairman of Sony, taking the reins from Nobuyuki Idei in 2005. While maintaining a grueling travel schedule that split his time among New York, his home in London, and Sony’s headquarters in Tokyo, Stringer has had to make deep job cuts, close factories and grapple with a laptop battery recall, all the while going up against tough competitors in Apple, Samsung and Nintendo.

The Hirai promotion coincides with the announcement of a corporate reorganization. In addition to a consumer products division, another unit is being created for business-to-business areas such as semiconductors, batteries and other components, to be led by Hiroshi Yoshioka.

Hirai, 50, is widely seen as a rising star within Sony, lauded for helping spur the latest success of PlayStation 3. He is known to be affable and fluent in English as well as Japanese.

“In his current role, Mr. Hirai has successfully led the turnaround of the games business,” Sony said in a statement.

Hirai has done a sterling job turning Sony’s once troubled game biz into a moneyspinner. In the most recent quarter, ending in December, profits in Hirai’s Networked Products and Services group, which includes games, soared 135% to $564 million. Leading the way was the PlayStation 3, which moved 6.3 million consoles and about 58 million games in the quarter, while contributing to profits with reduced costs. Two years ago the division reported a third-quarter loss of $338 million.

Hirai and his team have also built the PlayStation Network into a destination for 74 million registered users, offering music and video as well as games on the PS3. He begins his new job April 1.

With an executive so steeped in the hardware side of the business, Hirai’s potential rise to CEO will almost certainly renew speculation that Sony would consider selling or spinning off its movie and music divisions, which now account for about 13% of revenues and are among the worst performers inside the company. Operating profits at its film division in the quarter ending Dec. 31 fell 67% to $58 million, and at music by 16% to $241 million.

Sony is an anomaly among big media companies, with both hardware and entertainment properties. Because of that, and its truly global breadth, it has often been hard for analysts to get their heads around the business. Separating entertainment from consumer electronics would certainly give investors a cleaner view of operations and allow them to more easily compare it to companies such as Apple, as well as to other big media giants like Time Warner.

Stringer’s future has been subject to speculation in recent months. In January, he denied he was interested in the chairmanship of the BBC, a position that would certainly ground him after years of racking up the air miles.