Kazuo Hirari Details His Four-Point Plan To Save Sony

Posted on Feb 2 2012 - 1:08pm by Editorial Staff

Sony’s soon-to-be President and CEO Kazuo Hirari today during the company’s earnings call took a step forward and discuss his master plans for saving the troubled company. The company posted an operating loss of $1.2 billion and net loss of $2 billion on revenue of $23.37 billion. Sales were 1,822.9 billion yen (USD $23,370 million).

Sony TV Business: He stated, “We believe that the TV business is essential for Sony’s future growth strategy. That’s our perception about the TV business. The entire management team has a great sense of urgency regarding the fact that the TV business has continuously recorded losses for the last seven fiscal years. I will take the lead in implementing the plan to improve the profitability of the TV business, with the aim of extricating us from this loss-making structure as soon as possible.”

Sony Core Structure: “The entire Sony group will be involved in this profitability improvement plan, as it cannot be achieved by the TV business alone. When we announced our mid-range plan in November 2009, we outlined plans to create a structure under which we could attain a market share of 20%, 40 million units in fiscal year 2012, based on the expectation that LCD TV market would continue its high level of growth. However, industry growth has clearly slowed and developed countries are experiencing negative growth, especially in the U.S. and Europe, where economic conditions have deteriorated,” Hirari added.

LCD Panels Supply: He added, “With respect to our panel procurement strategy in fiscal year 2009, we assumed that LCD panels would continue to be in short supply. But there is now a surplus of panels. And as growth has slowed, we have had to drastically change our assumption regarding 40-million-unit business. It’s obvious, but we need to design and manufacture at an appropriate cost only the volume of units that we will sell. And we need to have a level of fixed cost that is appropriate for the size of our business. And we also need to provide customers with products and services that will sell.“

Profitability improvement plan: “We have developed that this time, we are determined to do everything we can do during this fiscal year, setting a goal of 20 million units for the year and implementing various measures, including impairment of machinery and equipment and disposal of unnecessary parts resulting from a reduction in number of models. The result will be a large loss for this fiscal year, but we believe these actions are necessary to turn a profit,” Hirari said.

He concluded by saying that we have made a business unit for the group that is developing and designing the next-generation TV. Here, we will create the next generation of home entertainment that fits with the entire company’s next-generation product strategy. We have also strengthened upstream processes by consolidating the marketing and product strategy function, so that product development does not stray off-center.

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