Sony's Hirai to extend PlayStation strategy

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TOKYO — Incoming CEO Kazuo Hirai aims to re-shape Sony Corp by linking hardware and software through online networks -- a model he used at its PlayStation unit -- dismissing any suggestion the battered brand would revert to a gadget-centered strategy under his management.

In the meantime, he said, he would focus on paring costs at its TV unit and look to squeeze expenses elsewhere to return Sony to profit.

The Sony Computer Entertainment model "is a bigger concept we can grow into a bigger space," Hirai, 51, said in a group interview at the company's Tokyo headquarters. "Hardware drives software and software drives hardware," he added, referring to online sales of games and other content PlayStation owners.

Hirai oversaw the phenomenal rise of the PlayStation gaming system in the United States and since last March headed Sony's consumer products and services business.

He didn't say what changes the wider application of that strategy would have on Sony, which unlike its consumer electronics rivals such as Samsung Electronics and Apple Inc, owns significant content in movies, music and games software.

A more immediate task for Hirai, however, is to stem losses with cost savings that will add to cuts made by outgoing boss, Howard Stringer.

Hirai formally succeeds Stringer as CEO on April 1, with the once-stellar consumer electronics brand heading for what it warned last week would be a much bigger-than-expected $2.9 billion annual loss, its fourth in a row.

The surge of red ink has put Hirai under intense pressure from investors and ratings agencies to quickly staunch losses at the sprawling electronics group. Hirai pledged not to flinch from tough decisions to trim costs and renewed a promise to return the TV business to profit in two years.

"We have to make some hard decisions on where there are some redundancies and reduce the fixed costs in a variety of different areas," he said, pointing to sales units in Japan, Europe and the United States, supply chains and Tokyo headquarters functions as areas where cuts could be made.

Credit rating agency Standard and Poor's on Wednesday cut its long-term debt rating on Sony and warned it may drop it another notch within a year if Hirai fails to stem TV losses and deliver a significant boost to profitability. [ID:nL4E8D861P] Sony was also downgraded by Moody's last month.

BIG BLEED

The TV division has lost more than $11 billion over eight fiscal years. Together, Sony, Panasonic and Sharp expect to lose $17 billion this year alone, highlighting the savaging of Japan's electronics industry by foreign rivals led by Samsung, weak demand and a strong yen.

A goal for Sony to end that bleeding in two years was "tracking where we said it would be at the end of the year, or a little ahead of that," Hirai said.

Better products would, he said, add as much as 40 billion yen ($520 million) in profit, with cost improvements adding another 50 billion yen, as part of a strategy he described as "defense and offense."

As well as weak global TV demand, Sony has been hammered by last year's flooding in Thailand that ruptured supply chains, a big one-off charge for exiting a flat-panel joint venture with Samsung, and smart competition from Apple and Samsung that has squeezed market share in TVs, smartphones and other gadgets.

Hirai predicted that LCD technology would remain the main battlefield in TVs for at least three years, before next generation technology takes hold.

STRATEGY ROLE

Hirai has yet to reveal his management line-up, naming only Tadashi Saito, a former Sony chief financial officer at Sony Electronics in the United States, as the company's first chief strategy officer since 2005.

Saito will work with senior managers "to formulate strategies for group companies overall, as well as giving us a lot of input and advice on M&A activity," Hirai said.

Hiroshi Yoshioka, previously identified by Stringer as one of "Four Musketeers" who could succeed him, along with Hirai, will take Sony into the medical imaging business and head up the group's innovation center, "seeking out new business opportunities," Hirai said.

As of Thursday's close, Sony shares had gained 13 percent to a 14-week high of 1,544 yen since Hirai was named as the next CEO, outperforming a 2.1 percent gain on the benchmark Nikkei average.

The stock, which slumped more than 60 percent during Stringer's seven-year reign, was down 0.4 percent in early trading Friday.

A Sony veteran of 28 years, Hirai was credited with reviving the PlayStation gaming operations through aggressive cost-cutting, in competition with Nintendo's Wii and Microsoft's Xbox.

A year ago, Hirai, a fluent English speaker, was promoted to head the consumer products and services business, overseeing Sony's network operations. He was also at the forefront of efforts to counter hackers who accessed Sony customers' personal details.

He takes over after a period of cost-cutting by Stringer, a rare foreign CEO in Japan who sold off TV factories in Spain, Slovakia and Mexico and outsourced more than half of the group's production to outside companies, including Hon Hai Precision Industry, a Taiwanese contract electronics maker whose key customer is Apple.

(Editing by Jeremy Wagstaff)

This story update corrects the share movement since Hirai's appointment

Copyright 2012 Thomson Reuters.

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Sony's 'Father of the CD' dies at 81

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TOKYO - as a young man, aspiring opera singer Norio Ohga wrote at Sony to complain about the quality of its tape recorders. This movement changed his life, when the company immediately recruited the man, whose Liebe of music are the development of the CD and the Japanese electronics manufacturer software and entertainment would turn into an empire. NYT: Culture of complicity, affected Nuke plants ' no dreams': Japan protest Nuke leak with 12,000 missing farmers, keeps Japan search in Japan, family spread ashes of beloved U.S. teachers one step forward': Japan, 100,000 houses to build baby bear adopted China farmer fast motion of aftershocks images of chaos, Destruction

Sony President and Chairman from 1982 to 1995, Ohga Saturday in Tokyo of multiple organ dysfunction syndrome died, the company said. He was 81.

OHGA's connection to the music contributed his work. The CD consisted of the extravagant music experts designed (4.8 inch) in diameter, are stored at 12 cm 75 minutes worth of music - thus, Beethoven's Ninth Symphony in its entirety.

From the beginning, Ohga recognized the potential of the superior sound quality of the CD. In the 1970s, when Ohga was that record would replace CDs albums Finally, skeptics scoffed. Herbert von Karajan, Stevie Wonder and Herbie Hancock spoke in defense of Sony digital-sound.

Sony sold 1982 the world's first CD and LP record sales in Japan overtook CDs five years later. The specifications are still used and developed the devices since promoted.

"It is no exaggeration to Sony development, audio and video products, in music, movies and wild, attribute and subsequent transformation into a global entertainment on guide, Ohga San foresight and vision," Sony Corp. Chairman and CEO Howard Stringer said on Saturday, with the Japanese honorific title.

Some decisions during Ohga of the Presidency, as for example you were $3.4 billion acquisition of Hollywood Studio Columbia Pictures, at the time as unwise and expensive criticized. But Ohga's focus on music, films and video games as a way to the electronic business expand Sony's success in his era, contributed.

"We are chasing after things are, touch the other company is not," Ohga said interview with the associated press in a 1998. "This is a big secret to our success."

Shattering that stereotype of the hard-headed Japanese Executive, the debonair Ohga was never shy, hair neatly combed back, his stormy way shines the fiery but naive air of an artist. His persona Sony's image at a time when Japan added global ambitions had a touch of glamour.

An experienced pilot, Ohga sometimes the aircraft flew to for a business trip. A gourmet, praised himself about his roast beef. His hobby was on his yacht cruising.

Joey Carbone, a Los Angeles-based and pianist of dozens of Japanese pop songs, met Ohga in 1986 after Carbone several hits for advertising for everything from cassettes to Honda scooters at the Sony music label wrote.

He recalls on Ohga-oriented Executive with could speaking companies and a variety of music is cool as outgoing, international. OHGA's Office was covered with photos of himself with various artists, Japanese and international.

"He looked like an actor." "He was very outgoing," said Carbone Saturday. "He was very, how can I say it - not introverted." He was always talking, always smiling, laughing and. He seemed a real love of life and the music. "He seemed to really love what he did."

Chairman of the Tokyo Philharmonic he went on Orchestra since 1999, it perform a few times per year. 1993 Conducted it the Metropolitan Opera Orchestra in Lincoln Center Avery Fisher Hall in a charity event Sony financed.

OHGA often compared are with leading companies to conduct an orchestra.

"As a conductor has to work, to the best draw in which members of his Orchestra, a President of the society on the talents of the people in his organization," Ohga said publication 1996 Sony in one.

Sony started in the midst of destruction and poverty after the second world war and is built on the popularity of transistor radios, Walkman, the Trinitron television, the CD - design history of modern electronics.

OHGA had Tokyo National University of fine arts and music in 1953 and Universitat of der Kunste Berlin graduated in 1957. It was established, to a career as an operatic baritone track tape recorders if Sony Masaru Ibuka co-founder and Akio Morita, fascinated by his complaints about the sound quality of the Sony, recruited him to the company.

He was senior Sony by his 30s, a rarity in a Japanese company. He became Chairman of what became 1989 Sony Corp. of America in 1988, and CEO of Sony in the year President of the CBS Sony records in 1970. Around 2000, he left the day-to-day business.

The company says he was key in establishing the brand Sony working on design and quality to produce products that looked attractive for consumers.

Sony Pictures Entertainment Chairman and CEO Michael Lynton and co-chair Amy Pascal said "Norio Ohga of whose visionary leadership deeply profound impact on the way and manner had, a brilliant and innovative businessman, was the people in the world of entertainment experience" in a statement.

OHGA had tried to lead a double life of the artist and Sony man.

One day, simmering he from exhaustion in the stage wings while waiting to go in that, "the marriage of Figaro," crashed the wrong direction from and saw his co-stars set stifling giggles.

He made his opera career but still promoted classical music in Japan by the support of young musicians and concerts.

Sony has discovered difficulties in recent years behind in flat-panel TVs to rivals such as Samsung Electronics Co. of South Korea, as well as in digital music players Apple Inc. It remains unique in a Hollywood Studio, a music business recording, and the blockbuster PlayStation video game unit, the Ohga contributed, although critics note that it has realized the benefits of owning never fully areas electronics and entertainment.

OHGA is survived by his wife, Midori. Sony said that a private wake will be held later.

___

AP technology writer Ryan Nakashima contributed by Los Angeles.

Copyright 2011, the associated press. All rights reserved. This material may not be published, broadcast, rewritten or distributed.

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