Sony gets real on restructuring, pockets of denial persist

Sony gets real on restructuring, pockets of denial persist

TOKYO - Sony Corp may finally be serious about restructuring, setting aside up to US$1 billion (S$1.26 billion) this fiscal year to cut staff, but the hard-nosed figures in its latest results still include noticeably rosy forecasts.

While some parts of the company still cling to the old habits of over-promising, a group of newly appointed, no-nonsense executives is hinting that, in time, the divisions behind products like Bravia televisions and Xperia smartphones will also be brought round to reality.

Sony missed the forecasts it set for its TV and smartphone divisions last year as it struggled to compete with more nimble rivals. This year, it is still targeting sales growth of 20 to 30 per cent for both divisions, a rate that is several times the average expectations for those markets.

It also said it would earn a profit on all five of its electronics categories after three units notched up losses last year, raising eyebrows among analysts.

"When they forecast profit in each product category, it worries me," said Atul Goyal, an analyst at Jefferies in Singapore, adding it was possible that Sony's smartphone and TV sales might actually fall by 20 to 30 per cent instead.

"There are many things happening on the competition side in the product categories in these mature markets."

Sony, like compatriot rival Panasonic Corp, could end up shrinking in key consumer markets - a strategy once unthinkable for a brand synonymous around the world with consumer electronics.

Sony, which makes the PlayStation game console, Cybershot cameras and audio equipment, is due to outline its strategy on Thursday for the year at a briefing chaired by Chief Executive Kazuo Hirai.

Sony announced in February that it would pull the plug on its Vaio PCs, the first time it quit a major consumer product line, after a decade of assorted restructuring efforts chipped away at factory headcount but left its expanding office workforce largely untouched.

"There may be some cases where we have no choice but to get out of a certain business. We're aware of that risk," a senior Sony executive said last week after the company forecast a 50 billion yen ($616.5 million) net loss for this financial year.

The executive spoke on condition of anonymity.

"I think Philips should be a benchmark for us," he added. "They really turned around their business structure. They exited TVs. They quit chips. That transformation was brilliant. I don't mean we would quit the same products but we should treat them as a benchmark in terms of changing our business structure."

Dutch electronics firm Koninklijke Philips NV focuses on lighting, healthcare and consumer lifestyle products including kitchen blenders and fryers.

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