'Leaner' Sony back on trac: CEO Stringer

November 20, 2009 08:46:23 AM

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After a radical overhaul, a leaner Sony Corp. is back on track to become a world leader in networked gadgets that can download games, music and movies, chief executive Howard Stringer said Thursday.

Stringer, a Welsh-born American who became the first foreign chief at one of Japan's most famous companies in 2005, wants to meld its strengths in televisions and other gadgets with its content.

"The recession did interrupt the flow of energy in the whole digital world everywhere, but we are back on top," he told a news conference.

"We've come a long way. We're better. We're leaner. We're faster," added Stringer, who overhauled the management of the loss-making company earlier this year, promoting younger executives to key posts.

Sony slashed 19,500 jobs over the year to September 2009 and Stringer did not rule out further cuts, saying: "We must be light, speedy and tough."

The electronics icon, facing tough competition from rival products such as Apple's iPod and Nintendo's Wii, sees a future where people will download its music and movies through the Internet to their Sony mobile telephones and TVs.

The company aims to introduce "evolving" television that delivers new applications over the Internet to people's TV sets, and is also targeting a 40-percent share of the market for electronic book readers.

Sony is also touting its PlayStation Network system, which already has 33 million registered users and allows owners of the video game console to download games and link up with other gamers.

"The content and services available currently on our platform are more than anything else has," Stringer said.

"When you tie innovative new hardware together with compelling content and networked services with a common user interface across products, you create a unique user experience that can differentiate Sony from the competition."

Sony said it aimed to return its core television and game businesses to profitability by the business year to March 2011.
It is chasing a 20 percent share of the worldwide liquid crystal display TV market by early 2013, helped by the launch of 3D televisions and games next year.

At the same time the electronics and entertainment conglomerate "must simultaneously dazzle with innovation in network services and content," Stringer said.

The maker of Bravia televisions, PlayStation game consoles and Cyber-shot cameras is forecasting its first back-to-back annual losses since it was listed on the stock market in 1958.

Last month it narrowed its loss forecast for the current business year to March 2010, to 95 billion yen from a previous projection of 120 billion, helped by cost-cutting efforts. In May Sony announced its first annual loss in 14 years.

"In addition to fundamental changes in the organisational structure, we are driving costs out of the company to right-size it for the competitive environment in which we operate," said Stringer.

Sony said it had already achieved about 80 percent of the 330 billion yen in cost savings that it is targeting for the current financial year.

But, underscoring the challenges facing Sony, Fitch downgraded its long-term credit rating on Sony on Thursday by one notch, to "BBB" from "BBB-plus".

"Sony's core electronic products, including TVs, suffered from weakened industry competitiveness," said Fitch analyst Kevin Chang.

Sony's corporate structuring "is yet to translate into a material improvement in its core competitiveness and profitability," he added.