Kaz warns of pain after losses

[The Sith]

http://www.montrealgazette.com/busin...555/story.html
The gaming division turn anprofit but may be affected by the cuts.

Sony sees $2.9 billion loss, new CEO warns of pain

"Sony's executive deputy president Kazuo Hirai, who was named new president and chief executive officer as of April 1, speaks during a news conference as the Japanese games, music and electronics giant releases its quarterly earnings reports in Tokyo on Feb. 2. Japanese entertainment giant Sony more than doubled its full-year net loss forecast to 2.9 billion U.S., one day after announcing that its president and CEO Howard Stringer would step aside.
Photograph by: KAZUHIRO NOGI, AFP/Getty Images
TOKYO (Reuters) - Ailing Japanese electronics giant Sony Corp. warned it was heading for a bigger-than-expected $2.9 billion U.S. annual loss, presenting a daunting task for incoming CEO Kazuo Hirai, who vowed to move quickly to turn things around.

Overtaken by more innovative rivals such as Apple Inc. and Samsung Electronics over the past decade, Sony posted a $2.1 billion net loss for October-December, normally a strong quarter boosted by year-end holiday sales, as it battled a strong yen, flooding in Thailand that ruptured supply chains, and a weak economy.

It also took a one-off charge for exiting a flat panel joint venture with Samsung, and said sales dropped 17 percent to 1.82 trillion yen.

The forecast for a 220 billion yen ($2.9 billion U.S.) net loss for the year to March, Sony's fourth straight year of red ink, was close to double what the market had expected, and revealed the task ahead for Hirai, who replaces Howard Stringer as CEO in April.

Hirai, a 51-year old Sony veteran known for reviving the PlayStation gaming operations through aggressive cost-cutting, said he would not hesitate to scale back or withdraw from businesses if they were not competitive.

"I have a very strong sense of crisis about the environment surrounding us," Hirai told a news conference. "We cannot be afraid to make painful choices for the future of Sony. Our rivals and the operating environment won't wait for us."

There is unlikely to be a honeymoon period for Hirai, who is under immediate pressure to sort out the ailing TV business after it fell behind South Korean rivals such as Samsung in a market where prices are tumbling.

Above all, Hirai will strive to recapture the innovative flair that led Sony to come up with the Walkman personal music-player in the 1980s and the PlayStation in the 1990s, and regain ground lost since then to Apple and Samsung whose iPhones, iPads and Galaxy gadgets are snapped up by consumers.

Some analysts believe Hirai - 51, tall, urbane and a fluent English speaker - can rekindle the flame, saying he has a good grasp of the overall business and is likely to know how to break down its silos and integrate its divisions.

Others are less optimistic about his chances.

"It won't be easy for Sony to regain its lost ground under new leadership, as its overall competitiveness has sharply weakened," said Kim Young-Chan, analyst at Shinhan Investment Corp in Seoul.

"It's got structural problems that will take years to fix.

"It's not just Sony, but Japanese IT firms have similar problems. They are failing to innovate and produce industry-leading products in almost every major area - from TVs to displays, tablets and smartphones."

Hisashi Kuroda, general manager of equity investment at Meiji Yasuda Asset Management in Tokyo said Sony had to take tough decisions.

"Unless they do radical reforms, like the ones that would put everything completely upside down, Sony may not be able even to make profits."

Painful decisions

A chief concept in Hirai's strategy hinges on merging Sony's robust roster of entertainment properties - including singers Kelly Clarkson and Michael Jackson, and the "Spider-Man" and "Men in Black" film franchises - with its Vaio, Bravia and other electronics brands, in an effort to boost sales.

He said the TV business would be crucial to this "convergence" strategy, brushing aside suggestions it may need to pull out of the market even with the business set to lose 220-230 billion yen this financial year.

"There's still a chance in home electronics and I don't think Sony should quit TV's, but unfortunately I can imagine the day may come when they will pull the plug on the business," said a former engineer and executive at Sony.

"This is because when you keep making losses and you have no fresh ideas, that becomes the easy choice."

Chief Financial Officer Masaru Kato said Sony aimed to halve losses on flat TVs in the next financial year from April, when as a company it hopes to make an operating profit of about 200 billion yen.

Hirai singled out medical as a potential core business for the future, but he declined to comment on any possible investment in troubled endoscope maker Olympus Corp.

Troubled legacy

Welsh-born Stringer, a former journalist who ran U.S. broadcaster CBS, was brought in as a rare foreign CEO in Japan to shake things up, but many analysts see his major achievement as cost-cutting.

Sony's shares have lost nearly two-thirds of their value since Stringer, who turns 70 this month, took the helm as CEO and chairman in 2005.

Stringer sold off TV factories in Spain, Slovakia and Mexico and outsourced more than half of its production to other companies, including Hon Hai Precision Industry, the contract electronics maker whose key customer is Apple.

Recently, Sony exited an LCD panel venture with Samsung, enabling it to obtain screens for its TVs more cheaply. It also agreed to buy out Ericsson's half of their smartphone venture for $1.5 billion to shore up its position in a market where Apple and Samsung have become leaders.

Hirai was effectively anointed as Stringer's successor last March when he was promoted to head Sony's consumer products and services businesses, which produce the bulk of Sony's $85 billion in annual sales.

"They've been grooming him for a while," said Dan Ernst, Hudson Square analyst. "I think he will carry on the plan for Sony - as difficult as it is."

The last year has been brutal for many Japanese companies, hit by a strong yen that hurt exports, and two natural disasters - the March earthquake in Japan and the Thai floods.

Stringer said those disasters and the Lehman shock of 2008 had hit Sony hard and masked much of the progress made during his watch.

"If we hadn't reformed Sony as we did, can you imagine where we would be today," Stringer said. "I rest.
*

[Ghost-Rhayne]

Really looking forward to seeing what happens. Also very excited to see this convergence of hardware and content that Stringer and the others have been mentioning.

[Bigdoggy]

I wonder if this means they will start to compete in prices rather than tech. One of Sony's major downfalls was that a lot of things they made wasn't nearly as good as their competitors and on top of that it was very VERY expensive.

For example, The Xperia when it first came out was so expensive that every other cellular phone company was able to get ahead of it, even the crappy ones o.O

[Two4DaMoney]

As long as they don't drop out of gaming then I'm good. I sense a $400 dollar ps4(or whatever they call it) next gen.

[Beast of Bourbon]

I'm afraid you might be right.

[Two4DaMoney]

I'm afraid you might be right.

Yep, because they proved it before and nintendo proved it this gen that you don't have to use the best tech to sell consoles. Also with them losing so much money, they have to look into turning profit again. They could look at MS's xbox 360 for that. Have comparable tech; lose a bit at launch;turn crazy profits years later.

[DreDayDetox]

$400 better than $600

[Thorzilla]

Anyone who thinks Sony or anybody else will sell a new console for less than $400 is kidding themselves.

[Ghost-Rhayne]

Anyone who thinks Sony or anybody else will sell a new console for less than $400 is kidding themselves.

Exactly...graphic whores are foaming at the mouth and crying out for systems that can offer BF3 graphics and better yet get their knickers in a twist at the idea of paying around $400. How much would a PC cost that runs it well?

[DreDayDetox]

Whatever the cost, I'm buying because I love Sony

[radgamer420]

Whatever the cost, I'm buying because I love Sony

Sony definitely has the games so I'm buying too.

[Bligmerk]

Stringer was in snooze mode during a catastrophic 2011, so Sony is going to need restructuring. Kaz knows that a central home entertainment device is the final battle ahead to capture the home electronics consumer market. The other reality is next gen is really going to be more about mobile so the smart phone and tablet market are going to be much larger and really competitive. Reading about what has been going on, Kaz has hit the ground running and he knows he has a tough job ahead. There are larger global economic and political problems that can limit how much he can do.

[Sufi]

I wonder if this means they will start to compete in prices rather than tech. One of Sony's major downfalls was that a lot of things they made wasn't nearly as good as their competitors and on top of that it was very VERY expensive.

For example, The Xperia when it first came out was so expensive that every other cellular phone company was able to get ahead of it, even the crappy ones o.O

I was gonna say, what are you talking about! lol.

Software-wise I can understand. Quality-wise, their shit is always among the best.

Problem is: Nobody cares about quality anymore now that people are poorer around the world. They just want stuff that will last them long enough and generally the quality of all products (imo) is getting better.

My opinion would be not to take a hit on quality but take a hit on features and keep it extremely simple. That way it's quality and cheap...what I would prefer anyway. I don't like all-in-one products, they're either too expensive and you won't use all of its features or they're cheaply made. Very rare to find the perfect combination.

[emmerich]

Whatever the cost, I'm buying because I love Sony

Me too man. No other way for me.

[Stripes]

Whatever the cost, I'm buying because I love Sony

Too bad there aren't more people like you out there. Wasn't Sony quoted before the PS3 launch saying people will buy it at any price point because of the name? Now they're nestled in 3rd place because the competition is much cheaper.

[Sufi]

Too bad there aren't more people like you out there. Wasn't Sony quoted before the PS3 launch saying people will buy it at any price point because of the name? Now they're nestled in 3rd place because the competition is much cheaper.

Does it matter when they're delivering the most?

But yea, it was arrogant of them to say that back then.

[Completely Average]

I was gonna say, what are you talking about! lol.

Software-wise I can understand. Quality-wise, their shit is always among the best.

Sorry, but I simply cannot agree with that. Sony's sound equipment (Receivers, speakers, etc...) in particular have been poor products compared to the competition for a long time. Sound quality is subpar and reliability has been questionable at times. Premium prices with average quality. For the money you're better off with a Denon, Onkyo, or Yamaha. I don't know about their new stuff, but late 90s early 2000s Sony receivers had a really bad problem with losing sound to one or more speaker channels after about 3 to 5 years of use.

And in my personal experience their wireless home phones are garbage. Ours barely lasted long enough to be out of warranty before it failed, just barely.

Not all of their products are bad, many are very good, but Sony does have some cheap, dodgy products out there too.

[coolguy]

sony needs to stop makeing products that dont make them money. like there tv line they are way over priced

[Sufi]

Sorry, but I simply cannot agree with that. Sony's sound equipment (Receivers, speakers, etc...) in particular have been poor products compared to the competition for a long time. Sound quality is subpar and reliability has been questionable at times. Premium prices with average quality. For the money you're better off with a Denon, Onkyo, or Yamaha. I don't know about their new stuff, but late 90s early 2000s Sony receivers had a really bad problem with losing sound to one or more speaker channels after about 3 to 5 years of use.

And in my personal experience their wireless home phones are garbage. Ours barely lasted long enough to be out of warranty before it failed, just barely.

Not all of their products are bad, many are very good, but Sony does have some cheap, dodgy products out there too.

It's true that their phones aren't all that but I don't think they owned Ericson until recently. And yes, I've heard about Onkyo, Yamaha and Bose as well being the top brands. I didn't know they made speakers \O/

I've had a few instances where I could've bought their product over the other but I stuck with Samsung because they were cheaper...otherwise Sony edged out in quality.

HDTVs, monitors, BR/DVD players and Vaio laptops are among the best out there. That's specifically what I'm usually shopping for.

[TGO]

Sorry, but I simply cannot agree with that. Sony's sound equipment (Receivers, speakers, etc...) in particular have been poor products compared to the competition for a long time. Sound quality is subpar and reliability has been questionable at times. Premium prices with average quality. For the money you're better off with a Denon, Onkyo, or Yamaha. I don't know about their new stuff, but late 90s early 2000s Sony receivers had a really bad problem with losing sound to one or more speaker channels after about 3 to 5 years of use.

And in my personal experience their wireless home phones are garbage. Ours barely lasted long enough to be out of warranty before it failed, just barely.

Not all of their products are bad, many are very good, but Sony does have some cheap, dodgy products out there too.

I've had my Sony AV for 13 years, everything is as good as the day I bought it ok it dont do DTSHD 7.1 but it out performs anything I can buy now, and my biggest fear is that'll die one day and I'll have to buy the poor excuse of a AV/stereo system they've been putting out the last ten years

As for their phones like someone mentioned, design wise they do have the nicest looking phones and out of the android skins they manufactures put out, just ask anyone on xda, Sonys skin is the best too, they just need to release shit faster, I personally can't switch now cuz other phones look shit compared ui wise

Sent from my Xperia Ray

[Bigdoggy]

I was gonna say, what are you talking about! lol.

Software-wise I can understand. Quality-wise, their shit is always among the best.

Problem is: Nobody cares about quality anymore now that people are poorer around the world. They just want stuff that will last them long enough and generally the quality of all products (imo) is getting better.

My opinion would be not to take a hit on quality but take a hit on features and keep it extremely simple. That way it's quality and cheap...what I would prefer anyway. I don't like all-in-one products, they're either too expensive and you won't use all of its features or they're cheaply made. Very rare to find the perfect combination.

well, so far everything Sony has touched as been very expensive, so much so that I can definitely see such a huge loss on Sony. Another examples is there HDTV's, when I hear quality for a TV, i hear of something that actually works that wont crap out in a year or 3, also having it look good. Now, When HDTV's were very expensive, I picked up a Sharp Aquos, Sony's HDTV costed 2x the amount the sharp costed, which was close to $4,000 for a 52 inch. Sharp went down to $1,700 and Sony's HDTV was costing around $3,200 or something like that, it was either $3,200 or $3,500. It's no wonder there TV department took a flop right in the ass, way to expensive. Also, my Sharp is still looking very pretty when playing games at 720p or watching blu-ray movies at 1080p. The fact that there prices are so high on basically everything is probably why you see such a loss at Sony. If they keep on making those high prices then there is going to be a loss again.

They need to learn to make products that are still high quality but making the prices down to consumer level for more buyers, that is how you make the damn money, you create a solid foundation and fanbase. They do have a solid fanbase but in certain departments it's atrocious and it's mainly because of their prices.

For Xperia being $800 that was ridiculous, I wanted to get that phone but the $800 was a complete deal breaker. If anything the phone should have been marked at least $400

[HlicesArerich]

I'm buying because I love Sony

[Sufi]

well, so far everything Sony has touched as been very expensive, so much so that I can definitely see such a huge loss on Sony. Another examples is there HDTV's, when I hear quality for a TV, i hear of something that actually works that wont crap out in a year or 3, also having it look good. Now, When HDTV's were very expensive, I picked up a Sharp Aquos, Sony's HDTV costed 2x the amount the sharp costed, which was close to $4,000 for a 52 inch. Sharp went down to $1,700 and Sony's HDTV was costing around $3,200 or something like that, it was either $3,200 or $3,500. It's no wonder there TV department took a flop right in the ass, way to expensive. Also, my Sharp is still looking very pretty when playing games at 720p or watching blu-ray movies at 1080p. The fact that there prices are so high on basically everything is probably why you see such a loss at Sony. If they keep on making those high prices then there is going to be a loss again.

They need to learn to make products that are still high quality but making the prices down to consumer level for more buyers, that is how you make the damn money, you create a solid foundation and fanbase. They do have a solid fanbase but in certain departments it's atrocious and it's mainly because of their prices.

For Xperia being $800 that was ridiculous, I wanted to get that phone but the $800 was a complete deal breaker. If anything the phone should have been marked at least $400

Yup that's exactly what I think.

I would love to buy a Bravia but not when it's so much more expensive than a Samsung. They really need to start focusing on making things less expensive. I say take out the bells and whistles and keep the quality up.

[Sub-stance1]

Those are staggering losses. I hope Kaz can bring them back to profitability.

[Lefein]

Better days are ahead for Sony. They need to stick to doing what they do best and when the economy gets better, they will be a leaner machine with better services to back up their products.