Grace Huang
KAZUO Hirai is being criticised by a former Sony director who says that the company’s chief executive is abandoning its traditional engineering focus.
Sony’s electronics business is central to its long-term success, Tamotsu Iba, a former chief financial officer and vice-chairman, wrote in a letter sent to management yesterday.
Iba, who sent two other missives earlier this year, wants Sony executives to address his questions about executive compensation and Hirai’s leadership during a June 23 shareholder meeting.
Iba says Hirai’s strategy runs counter to Sony’s “Founding Prospectus”, handwritten by co-founder Masaru Ibuka in 1946. The document describes “a stable workplace where engineers could work to their hearts’ content in full consciousness of their joy in technology”.
Iba met with Hirai and other Sony executives in April without getting answers to all his questions, he said.
“Sony used to be a unique and extraordinary company,” Iba wrote in the letter. “During the past 10 to 20 years, Sony spirit for innovation has been diluted, and as a symbol, the Sony brand has become weak.”
George Boyd, a spokesman for Sony in Tokyo, declined to comment.
Shares of Sony declined 1 percent to 38.22 yen (R4) at the close in Tokyo, paring the advance this year to 55 percent. The benchmark Topix index has gained 19 percent in the period. Prior to becoming chief executive in 2012, Hirai led the game division.
Since his promotion, Sony’s workforce has shrunk by more than 20 000 people while the company’s share price has more than doubled.
“Sony’s electronics era has ended, it is heading down the hill and success is hard to repeat,” said Mitsushige Akino, the executive officer at Ichiyoshi Asset Management in Tokyo. “Sony used to be a global standard in the hardware era, that is what Japanese manufacturers are good at. But now it’s a software era.”
Iba said the departures in recent years of innovative engineers, including those labelled as strange or weird, had weakened Sony at a time Apple and Samsung Electronics dominated the mobile market with a succession of gadgets.
“The road to revive the bright electronics business might be distant,” Iba wrote. “But I would not give up, and would continue to promote the reform of the electronics business for revival in the coming year.”
Hirai forecast in February that operating profit will climb to 500 billion yen in the year to March 2018. That is the highest since 1998. Sony also aims to restore its dividend, which it scrapped in September for the first time since listing in 1958.
Mid-term targets
Iba cast doubt on the mid-term targets, citing a lack of detailed plans and management’s insensitivity to low motivation among Sony employees.
The letter also urged shareholders to hold management accountable for failures to meet earlier goals and establish a succession plan.
Iba vacated the chief financial officer’s position in 2000, when Sony was the market leader in several electronics segments. He expressed his hope yesterday of reviving Sony’s electronics prowess, and again cultivating the sort of engineering vision that once catapulted the company to the industry’s pinnacle. – Bloomberg