By Eric Pfanner and Takashi Mochizuki
TOKYO-- Sony Corp. Chief Executive Kazuo Hirai's comeback plan,
dubbed One Sony, is starting to look more like Several Sonys.
The Japanese electronics and entertainment company said
Wednesday that it would spin off its video and sound segment into a
separate wholly owned subsidiary, following a similar move last
year for its long-troubled television business. The goal is to get
them more focused on profits while the Sony parent looks for growth
in businesses such as movies, music, videogames and image sensors,
said Mr. Hirai.
After years of losses, Sony now aims to lift operating profit to
Yen500 billion ($4.2 billion) in three years. It expects to eke out
an operating profit in the year ending in March, with the TV
business turning to the black for the first time in a decade.
Mr. Hirai said Wednesday that he envisioned spinoffs of other
units. He also said the company would consider a sale of the TV
unit or the company's struggling smartphone business, though he
said nothing was currently in the works.
"I think we have to keep those possibilities in mind," he
said.
Mr. Hirai said making units more autonomous would spur managers
to focus on profitability and make it easier to pursue business
alliances.
Under the new structure, "each business unit will be more
flexible and speedy in making business decisions and will be asked
to be more responsible for what they do," said Atsushi Osanai, an
associate professor at Waseda Business School in Tokyo who used to
work at Sony. "A challenge for Mr. Hirai is to make sure these
spun-off segments remain coherent as one Sony group."
Mr. Hirai introduced the slogan One Sony in 2012 as a way to
draw together the company's disparate holdings, which range from
electronics to entertainment to financial services. A year later
Mr. Hirai rebuffed a proposal by the New York hedge fund Third
Point LLC for a partial spinoff of Sony's entertainment businesses,
which the firm said would unlock value that was obscured by the
travails of Sony's electronics arm.
Mr. Hirai said Wednesday that Sony wasn't giving up on the One
Sony approach. Under the new structure, Mr. Hirai, "there will be a
good balance between centrifugal and centripetal forces."
Sony has sharpened its focus on profitability since Mr. Hirai
named a new chief financial officer, Kenichiro Yoshida, last year.
While Sony expects to post a net loss for the year ending March 31,
it recently upgraded the outlook for its operating results,
forecasting a profit of Yen20 billion instead of a loss of Yen40
billion. Since Mr. Yoshida took his job last April, Sony shares
have risen 58%.
The company has spun off its personal-computer unit and recently
said it would pull the plug on its in-house music streaming
business. In its place, Spotify AB will provide digital music for
Sony devices.
Mr. Hirai, in a briefing on the company's midterm strategy,
focused more on profitability goals than grand visions of Sony's
future. The company, he said, wants to achieve a 10% return on
equity, a broad measure of profitability, up from minus 7.4% for
the year ending March 31.
Rather than pursuing sales volume, Mr. Hirai said, Sony will
focus on growth in profitable areas such as the PlayStation game
business and the image sensor unit, which makes cameras for Apple
Inc. and other smartphone providers. It sees growing demand for the
sensors in cars because of the spread of autonomous driving
technology.
Sony also sees its music division and its movie unit as growth
drivers, even though the latter is still recovering from a
cyberattack. Mr. Hirai said the company would consider acquisitions
of entertainment assets in places such as India.
In addition to a split-off of the video and sound units, which
Sony said would take place by Oct. 1, the company said it was
organizing its businesses into three categories according to their
growth prospects, with content, games and image sensors at the top
and smartphones and TVs at the bottom.
The hierarchical arrangement is a "good step," said Yasuo
Nakane, an analyst at Deutsche Bank, "though the question would be
how much it will actually spend on image sensors and PlayStation,
and how much it will not invest in smartphones and TVs to make sure
they will be profitable."
Megumi Fujikawa contributed to this article.
Write to Eric Pfanner at eric.pfanner@wsj.com and Takashi
Mochizuki at takashi.mochizuki@wsj.com
Access Investor Kit for Sony Corp.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=JP3435000009
Access Investor Kit for Sony Corp.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US8356993076
Subscribe to WSJ: http://online.wsj.com?mod=djnwires