Hirai tries to change the script at Sony
Kazuo Hirai spent an enjoyable afternoon at Sony Pictures last year plotting the course of a careering plane in The Amazing Spider-Man 2, as he and other executives examined shots before the final edit of the smash action film. If only charting the Japanese entertainment and electronics group’s course was as agreeable. While Sony’s chief executive is at pains to show he is a hands-on leader who can juggle meetings with product engineers and creative decisions in its media business, he has not yet changed a script Sony investors are painfully familiar with: lengthy restructurings, recurrent profit warnings and formidable competition in virtually every one of Sony’s product categories. Earlier this month Sony delivered its third profit warning in six months, missing its targets as it reported a net loss of Y125bn ($1.3bn) for the year to March, a loss it predicts will shrink to Y50bn in the 2015 fiscal year. Mr Hirai has been under pressure from Dan Loeb, the activist investor who called for Sony to spin its movie and music divisions into a separately listed company and sell off 15-20 per cent to investors. But two years into the job, Mr. Hirai says there are clear signs the company is on the right track. After almost a decade of restructuring, he argued in Tokyo on Monday, it is finally making good on promises to slim down to a leaner, more efficient organisation. In February he sent the clearest signal yet that he was willing to accelerate the restructuring with the announcement that its television business would be spun off into a subsidiary while the Vaio PC business would be sold. “We accomplished all we set out to do,” he said, but he acknowledged Sony could have gone further, saying: “We didn’t plan as aggressively as we should have.” Although analysts cheered the will to deal more decisively with the TV and PC businesses, long regarded as the sick men of Sony, many argued the growth areas identified by the group – its digital imaging, game and mobile units – themselves faced serious competition. Sony’s Xperia smartphone business for instance, long cited as a growth area for the group, last year had a global market share of just 3.8 per cent, placing it in seventh place behind rivals including Samsung and Apple. “Smartphone earnings could deteriorate due to severe competition, and among imaging the sluggish DSLR market could lead to stagnation in sales,” said Yasuo Nakane, analyst at Deutsche Bank, who also highlights higher restructuring charges as a risk. Mr. Hirai stressed the importance of Sony still having a smartphone presence, even as other Japanese manufacturers have pulled back from producing smartphones for international markets. “If we’re not players in this generation we’re not going to be players in the next generation,” he said. “If we lay our cards right hopefully we will be in that business in the next generation.” Sony’s sprawling size has seen it criticised in the past for being too siloed, and Mr Hirai said he now saw a greater willingness to collaborate between businesses. Though he has frequently insisted that Sony would continue to sell televisions and the group is spinning off the TV business rather than selling it outright, he hinted at a slight modification. If it continued to struggle, he said, it would “make sense to work with another company so we’re not completely in the TV business.”