Sony Corp CEO Sir Howard Stringer ousted Dr Ryoji Chubachi as president and took control of the main electronics business as the electronics giant faces major losses.
The surprise move, which leaves Stringer firmly in control as Sony braces itself for its first operating loss for 14 years, mirrors executive shake-ups at other major corporations hit hard by the collapse in global demand for cars and consumer electronics.
Stringer, who already holds the positions of CEO and chairman, said the reorganisation "is designed to transform Sony into a more innovative, integrated and agile global company with its next generation of leadership firmly in place." He will assume the expanded role from 1 April even as Chubachi becomes chairman in charge of product safety, quality and environmental issues.
Stringer, a Welsh-born US citizen, became the first non- Japanese to head Sony when he was appointed in June 2005. Prior to joining Sony, Sir Howard had a distinguished 30-year career as a journalist, producer and executive at CBS Inc. Before joining the electronics maker in May 1997, Stringer was president of CBS Inc., where he stayed for three decades, and chief executive officer of media and technology company TELE-TV.
In a statement, Sony claimed the changes would "fundamentally reorganise the company's games and electronics business to improve profitability and strengthen competitiveness in the midst of the continued global economic crisis".
Stringer announced the creation of two new business groups, headed by younger executives, to break down the "silos" that have prevented full integration of the company's hardware and software, and to devise "cool new products" that will appeal to digital-savvy young people around the world.
The company said today it will combine its VAIO personal computer, Walkman and Sony Computer Entertainment game businesses in the newly formed Networked Products & Services Group to focus on creating gadgets that can work with each other and connect to the Internet. Kazuo Hirai, 48, who's in charge of the game business, will head the new division.
The Bravia liquid-crystal-display televisions, Cyber-shot digital-camera, and audio and video operations will come under the New Consumer Products Group. Hiroshi Yoshioka, 56, who now heads the TV unit, will take charge of the division, Sony said. It said it would also create a software and technology team and a manufacturing and procurement team across divisions to bolster connectivity of products and services and save costs.
"[The changes] will now make it possible for all of Sony's parts to work together to assume a position of worldwide leadership and, together, achieve great things," Stringer said.
Sony rose 2 per cent to close at 1,668 yen on the Tokyo Stock Exchange before the company's announcement, while the Nikkei 225 Stock Average climbed 1.5 per cent. The stock fell 69 per cent in 2008, after gaining for four straight years.
Analysts said the personnel changes were another sign of Stringer's growing impatience with the slow pace of change at Sony, where, he complained recently, "there is still a lot of the old and not enough of the new". Since achieving record profits in 2007, Sony has become the victim of the global economic crisis and fierce competition, Stringer said at a hastily arranged press conference.
Though he oversaw dramatic improvements in the electronics business in 2007, Chubachi is believed to represent a traditionalist faction at Sony that has hampered Stringer's radical cost-cutting efforts since he became the firm's first foreign head in 2005. The changes follow rumours of discord between Stringer and other executives over Sony's direction amid plunging earnings and thousands of layoffs.
The firm behind PlayStation game consoles, Bravia flat-screen TVs and Cyber-shot digital cameras has been forced to shed 8,000 of 185,000 regular jobs worldwide and close about 10 per cent of its 57 factories, as well as laying off 8,000 temporary workers. (See: Sony cuts 16,000 jobs, shuts plants to save $1.1 billion / Sony braces up for recession; cuts jobs, closes factories)
Sony said last month it expected an operating loss - its first for 14 years - of 260 billion yen for the financial year ending in March. A year earlier it was celebrating an apparent return to financial health under Stringer, with profits of 475.3 billion yen.
Stringer, who has waived his bonus and will not receive a salary increase despite his additional role, defended his decision not to appoint a new president.
"This is a crisis - that's why I want to reduce layers," he said. "I'd like to eliminate bureaucracy for a change. This is about as excited as I've been for some months so don't try to put a bureaucratic layer between [the four new executives] and me. It's not going to happen … until I leave."
Sony is one of several Japanese firms to have announced management reshuffles amid a collapse in sales and earnings. Toyota, which is expected to register its first annual net loss since 1950, named Akio Toyoda, the grandson of the firm's founder, as its new president. Honda, Japan's second biggest carmaker, this week chose Takanobu Ito, a former engineer, as its new president and chief executive. (See: Honda names new president and CEO, struggles to find buyer for F1 racing team / Founder's grandson Akio Toyoda to head Toyota)