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Incoming Sony CEO to act quickly after $1.2b Q3 loss

updated 04:35 am EST, Thu February 2, 2012

Kaz Hirai vows to make tough decisions

Sony has recorded a $1.2 billion loss for the October - December quarter on revenue of $23.37 billion, reports Reuters. The company has now updated its forecast for the fiscal year expecting a worse than expected annual loss of $2.9 billion on sales of around $85 billion. Incoming CEO Kaz Hirai told reporters on Thursday, that when he takes the reigns in April, he will move quickly to turn things around for the struggling Japanese electronics and entertainment icon.

"There will be situations in which we will be required to choose, make a decision, or implement very painful issues that cannot be avoided for the future of Sony," Hirai said.

"But we can't take a step forward if we are afraid of this."

Sony has been struggling to respond to the steep price cuts and quality afforded by TVs from Samsung and LG, as well as finding it virtually impossible to compete with cheap sets flooding the market from Taiwan. Even though under outgoing CEO Sir Howard Stringer the company closed numerous factories and outsourced its production, its TV division has suffered seven consecutive years of losses. Despite this, the company expects to sell 20 million TVs.

Although with margins as tight as 5 percent for its TV division, the best the company hopes for in the next fiscal year is to halve its losses with a return to profit not yet on the horizon. Some pundits can now see the possible shuttering of its TV business, a move that would have been inconceivable even a few years ago. At this point, it has not been an innovation leader in the space for some time, with the most innovative TV products announced at CES 2012 coming from both Samsung and LG with their pair of ground-breaking 55-inch OLED TVs.

Sony's mobile partnership with Ericsson has also come to an ignominious conclusion with the division also recording a loss. However, Sony's Android smartphones have improved markedly in the past 12 months after it failed to launch any headlining devices in 2010, ceding the Android space to Samsung, HTC and Motorola. It has also released one of the better received Android tablets in its Tablet S, however it is yet to make a major impact in the mobile devices space. It has also worked hard to integrate its entertainment offerings across all of its platforms. Despite this, Sony Pictures and Sony Music also have not faired much better, with both struggling to turn a profit.

For the coming quarter, Sony also expects lower than expected PS3 sales as well as a cut in previously forecast camera sales.

Hirai, who helped turn around Sony's $2 billion loss-making PlayStation division into a profitable enterprise when leading the division, is thought to have the ability to break down the silo mentality that is said to have held the company back. Various business enterprises within the organization have at times failed to cooperate. A visible symptom of this has been Sony's inability to compete with iTunes, having more luck selling its video and music content through it, rather than through its own online distribution framework - an area that it has finally moved to address.

Hirai's task will be to help the company function more synergistically and cohesively, and foster greater innovation if it is to regain the stature it once enjoyed, but has seen slip away.

by MacNN Staff




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