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Friday, April 13, 2012

Hirai announces Sony's turnaround strategy


Staff writer

Sony Corp., which expects to suffer a record loss for the latest business year, announced Thursday it is considering tying up with rivals to get its money-losing TV business back into the black by the end of March 2014.

The company also confirmed that it will lay off 10,000 employees worldwide, or 6 percent of its workforce, by the end of next March, confirming earlier media reports. The move is aimed at cutting fixed costs by 60 percent and operational costs 30 percent in two years.

"I am determined again to reform and revive Sony. There is no other time that Sony can change," President and Chief Executive Officer Kazuo Hirai, who replaced Howard Stringer on April 1, said at a news conference in Tokyo.

Sony and other Japanese electronics makers are taking massive losses on TVs and other appliances as consumers snap up products built by their overseas rivals, such as Samsung Electronics Co. and other Asian companies. The strong yen has also weakened Japanese vaunted exporters, including Sony.

Hirai said Sony will place the highest priority on its electronics business, which accounts for about 60 percent of its entire business portfolio. For the year ending March 2015, Sony has set a ¥6 trillion sales goal for electronics while targeting overall group sales of ¥8.5 trillion, he said.

Besides electronics, the Sony group has movie, music, financing and other businesses.

It will focus on three components of the electronics business — digital imaging, gaming and mobile-related products and services, Hirai said. In particular, Sony is taking aim at ¥1.8 trillion in sales in the mobile-related business for the year ending March 2015, more than double what it is expected to log for the year ended last month.

But the new president said the struggling firm will not dump its TV business despite suffering an eighth consecutive year in the red. He said Sony aims to return this segment to profitability by the end of March 2014.

Thursday's steps were announced two days after the once high-flying electronics giant lowered its business forecast. It now expects a record ¥520 billion group net loss for the business year that ended March 31, far larger than the forecast of a ¥220 billion loss announced in February, and the fourth consecutive year of net loss.

The strategy was announced also at a time when Sony is grappling with harsh global competition from rivals Samsung Electronics Co. and Apple Inc.

In recent months, Sony has taken a series of restructuring measures.

In December, it terminated its joint venture with South Korea's Samsung for producing liquid crystal displays for TVs.

Last month, it announced it will unload its noncore chemical business by the end of the year.



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