Sony chief Kazuo Hirai's apology flags another year of losses

Chief Kazuo Hirai's projection of a sixth loss in seven years brings vow to hasten restructuring

PUBLISHED : Friday, 20 June, 2014, 12:59am
UPDATED : Monday, 23 June, 2014, 9:39pm

Sony chief executive Kazuo Hirai apologised to investors yesterday after the maker of PlayStation consoles and Xperia smartphones projected a sixth loss in seven years.

"Sorry that we failed to meet shareholders' expectations," Hirai said at the company's annual meeting in Tokyo.

"We will bear responsibility to complete restructuring in fiscal 2014, with a strong sense of crisis and without further delay."

Sony has lost 85 billion yen (HK$6.46 billion) since Hirai became chief executive in 2012 and predicts a further 50 billion yen in loss this year as he struggles to revive the television business. The 53-year-old is counting on more restructuring, a slate of Amazing Spider-Man films, new Xperia smartphones and potential sales of the PS4 on the mainland to revive its fortunes.

"It's a win-or-lose year for Hirai," said Naoki Fujiwara, chief fund manager at Tokyo-based Shinkin Asset Management. "If he cannot meet his committed numbers, he will lose force as a leader."

Hirai was promoted in April 2012, taking the helm of a firm that had lost money at its television unit since 2004. He failed to deliver on promises to turn the unit profitable and the business has now lost more than 790 billion yen in the past 10 years.

Sony is cutting almost US$1 billion in costs after exiting the Vaio personal-computer business and is targeting 400 billion yen in operating profit by end-March 2016, spurred by creation of a new television business.

While investors are not yet calling for Hirai's job, they do want the turnaround to show traction after the firm cut its earnings three times last year. Sony is worth about US$17 billion, compared with a market valuation of about US$120 billion in 1999.

"What Hirai is doing now isn't wrong, but it is too slow," said Kazuyuki Terao, Tokyo-based chief investment officer at Allianz Global Investors Japan. "The market situation is changing fast, and the restructuring isn't keeping up with the speed of change."

When Hirai took over, he said Sony's revival would be driven by mobile devices, games and imaging products.

Sony is splitting its television manufacturing unit into a separate operating entity. The division is focused on so-called 4K ultra-high-definition sets and forecasts sales of 16 million liquid-crystal display television in the fiscal year to March next year, compared with 13.5 million sets last year.

Sony's television sales rose 30 per cent to US$2.15 billion in the first three months of this year, spurred in part by demand before the soccer World Cup, compared with US$1.65 billion in the same period last year.

The sale of its personal computer unit will take effect on July 1, with the company booking an 80 billion yen loss this fiscal year.