Sony CEO: turnaround strategy will work

Sony Corp’s new CEO, Kazuo Hirai, on Wednesday defended retaining his predecessor, Howard Stringer, as chairman of the board and promised his turnaround strategy will save Japan’s troubled consumer electronics giant.

Hirai outlined the revival plan, first announced in April, that stakes Sony’s future on mobile devices such as the Xperia smartphone, gaming and digital imaging, while developing new businesses, including a medical unit.

Hurt by mounting losses in its TV business, Hirai said the plan will expand group sales by a third to 8.5 trillion yen ($106.97 billion) in two years with an operating margin of more than 5 percent.

Hirai also revealed a target for tripling online gaming network sales by March 2015, but added few new details to a plan that has so far failed to convince investors a turnaround is imminent for the maker of Bravia TVs, Vaio laptops and PlayStation games consoles.

A record 9,303 shareholders gathered at a hotel in Tokyo to hear Hirai chair his first annual meeting. Stringer also took to the podium to say he deeply regretted a record loss of 456.7 billion yen ($5.75 billion) in the year ended March 31. Interrupted by hecklers, Stringer blamed Japan’s 2011 earthquake and production-disrupting floods in Thailand for the loss.

When asked by a shareholder why Sony was keeping Stringer and vice chairman Ryoji Chubachi on the board after such a heavy loss, Hirai said he “needed the advice and support of Stringer and Chubachi.”

Sony’s share price since Hirai’s elevation has dropped by 36 percent compared with a smaller 13 percent dip in the Topix index and a 19 percent decline in local competitor Panasonic Corp, which also held its annual shareholders meeting Wednesday.

Sony’s market value at Tuesday’s closing price was $13.9 billion, less than one-tenth of the $158 billion worth of its main foreign rival, Samsung Electronics.

Apart from questioning Stringer’s new position, shareholders asked for more details on Hirai’s revival strategy and quizzed the company about the impact of a strong yen on profits. The meeting, as expected, approved Stringer’s appointment and those of 13 other board candidates, including Hirai.

One attendee sought confirmation of a local media report that Sony was preparing to invest 50 billion yen in endoscope maker Olympus Corp as that company struggles to bolster its financial standing in the wake of its huge accounting scandal.

“We are not at the stage where we can comment,” Hirai said, neither confirming nor denying the report.

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Sony CEO: turnaround strategy will work