updated 07:45 am EDT, Thu April 12, 2012
Sony lays out plan for recovery, slashes jobs
Sony CEO Kaz Hirai has detailed his ‘One Sony’ recovery strategy moving forward. Vowing that ‘Sony will change,’ Hirai’s plan is to focus the company’s energy and resources on its core businesses of digital imaging, gaming and mobile. It will also achieve a return to profitability by slashing 10,000 jobs in order to turn around its record $6.4 billion loss for the past fiscal year.
Hirai explained that its latest restructure will cost the company around $926 million over the course of fiscal 2012. However, he believes that the company can return still return a modest profit by the 2014 fiscal year. A key pillar of his strategy is to tackle the ongoing issue of Sony’s television division, which has lost a staggering $10 billion over the past ten years. To address this issue, Hirai said that the company will reduce the number of models produced by 40 percent and switch its emphasis to producing OLED and Crystal LED displays.
Sony also aims to boost sales of its products to emerging markets and to create new businesses. As examples, Sony offered India and Mexico as two examples where it has already achieved strong results, securing the majority of the market share in those countries for its AV and IT products. The company aims to produce 60 percent of its income from global sales to come from emerging markets, while new businesses it has entered include the medical industry and the supply of equipment and components. The development of its 4K projectors is another new business it aims to leverage.
Further, Sony aims to select aspects of its businesses with the best growth potential and spin-off those that it feels it is not in a position where it has the resources to turn them around or that they don't align with its current initiatives. It may also partner with other companies in order to move forward businesses that are currently under performing.
It is universally agreed that Kaz Hirai is the best man to turn Sony’s fortunes around. He achieved hero status within the now ailing company when he led the PlayStation division out of the doldrums to a market leader after rounds of cost-cutting and better aligning the division with stronger product focus. Whether he will be able to repeat the magic at the helm of the company at large will remain to be seen. The rise of Apple and Samsung have been at Sony's expense. While the US and Korean giants have been reporting a series of record earnings, Sony has suffered repeated losses.