Sony Sees Shift From Recovery to Growth
Sony Corp. Chairman Howard Stringer promised Thursday to shift the struggling electronics giant from recovery to growth and to make the PlayStation 3 a profit driver despite its bungled rollout.
But investors at the company's annual shareholder meeting in Tokyo remained skeptical of an imminent turnaround, pressing Stringer for a clear strategy on how he intended to recoup losses at its video games unit and catch up to rivals like Apple Inc. in portable music players.
"We will shift Sony from recovery to profitable growth," Stringer told about 7,000 shareholders gathered in Tokyo, saying Sony's integrated and global approach to electronics, games and entertainment made it a "dominant company" in the digital age.
Stringer, the first non-Japanese to head Sony, played down his British-American dual citizenship and emphasized his commitment to reviving the Japanese company's international prowess.
"I am not a foreigner. I am a Sony warrior," he said, repeating a description of himself that he first used at a shareholders' meeting in 2005, when he took the helm of the company.
Other Sony executives said the company's key electronics sector was also regaining its health on booming flat-panel TV and digital camera sales. The company maintained its upbeat forecast for record fiscal year earnings.
The bullish tone signals that Sony may finally be rebounding from a host of recent mishaps, including the PS3 game console launch and a massive battery recall that widened recent losses.
Stringer, who is also chief executive, said the PS3 was "a key driver" of future growth despite a rollout marred by embarrassing delays, production shortages and intense competition from Nintendo Co.'s popular Wii console.
Sony shipped 5.5 million PS3 machines in fiscal year through March, fewer than the 6 million the company had targeted and losing out to Nintendo, which shipped 5.84 million Wii machines worldwide during the same period.
A price tag set below production costs has also eroded profits, and Sony has warned its gaming division will be in the red.
"All the production problems have been solved. We are making a comeback already," said Stringer, promising to boost game offerings and bolster the machine's networking platform.
"We always lose money in the hardware initially, and we recover that money gradually," he said. "We believe that the PS3 going forward will be vital to our future, and succeed."
Sony's newfound confidence also demonstrates the key strides it has made in catching up to rivals like Sharp Corp. and Samsung Electronics Co. in flat panel TVs and other products.
Pressed by shareholders at the meeting, Stringer said that Sony -- maker of the iconic Walkman -- would not repeat its blunders in ceding dominance in the portable music player market to Apple Inc.'s iPod.
Sony was making a comeback as the market moved toward video-equipped players and as more customers listened to music on their mobile phones, he said.
"We have worked very hard to catch up so that in the age of video we will not suffer as much as we did in audio," he said.
"More and more customers are getting their music downloads on their mobile phones, and in this case, the Sony-Ericsson mobile phone is a great success and we have sold as many of them as iPods," he said, referring to Sony's joint venture with LM Ericsson.
Since becoming head of the company in 2005, Stringer has embarked on a wide-ranging restructuring program that has involved dropping unprofitable businesses, selling off assets, reducing jobs and shuttering plants.
Sony President Ryoji Chubachi maintained a bullish earnings forecast for this fiscal year, saying he expected profit to more than double to a record 320 billion yen (US$2.7 billion; euro2 billion) from 126.3 billion yen the previous year on strong demand for liquid crystal display TVs, camcorders and digital cameras.
Last year, Sony's popular Bravia flat-panel TVs grabbed top world market share in the sector measured in sales, he said.
Stringer has also ridden out a massive global recall of about 10 million lithium-ion batteries that cost the company about 51 billion yen (US$425 million; euro314 million).
The faulty batteries were used in its own laptops, as well as those from Apple, Dell Inc., Lenovo Group Ltd. and others, and burst into flames in some cases.
Still, Investors remained wary of a full recovery. Sony shares, which have risen 27 percent this year, fell 1.51 percent to 6,520 yen (US$52.72) in Tokyo following the shareholders' meeting.
"It's hard to think that Sony has solved all its problems," said shareholder Kazuhiko Machida, a retired kitchen products manufacturer employee, pointing especially to losses from the PS3 console.
"The Sony brand has taken a beating," he said. "I think Sony may be at a crossroads, but it's too early to say 'Banzai!'