Sony Corp (Tokyo Stock Exchange)
More 6758.T News...
Sony shares outstrip peers after shake-up
*Shares end down 0.5 pct vs sector index's 3.2 pct fall
*Management reshuffle boosts hopes for quicker reform steps
*Long-term prospects remain unclear
(Adds fresh fund manager, analyst comments)
TOKYO, March 2 (Reuters) - Shares of Sony Corp <6758.t>
outperformed those of its rivals in a sliding market on Monday,
as CEO Howard Stringer's move to directly oversee the electronics
arm at the centre of the firm's problems raised investor hopes
for speedier restructuring.
But market players said the management reshuffle alone, which
saw Stringer replace Sony's president with himself, was unlikely
to put the company back on a growth path, and they were waiting
for new products and reforms to show the firm was heading in the
right direction.
Current President Ryoji Chubachi, the current Sony No.2 and
head of the electronics division making Bravia flat TVs,
Cyber-shot digital cameras and Handycam camcorders, will become
vice chairman in the reshuffle announced on Friday. [nT212310]
It is the latest in a series of management changes at Japan's
top exporters in recent months including Toyota Motor Corp
<7203.t> and Honda Motor Co Ltd <7267.t> as they grapple with a
widening recession.
"Eliminating layers and rebuilding a system so that he can
lead the business himself is not a bad decision," said Mitsushige
Akino, chief fund manager at Ichiyoshi Investment Management.
"Now it's up to Stringer's capacity as a top-down manager. If
he can lead the company effectively, recovery would be quicker."
Sony, which runs a long way behind Apple Inc'siPod
in portable music and Nintendo Co Ltd's <7974.os> Wii in video
games, is set to post an record operating loss of 260 billion yen
($2.7 billion) for the year to March 31, with problems in its
electronics unit largely to blame.
Shares in Sony closed down 0.5 percent at 1,660 yen,
outperforming the Tokyo stock market's electrical machinery index
<.IELEC.T>, which lost 3.2 percent.
Sony stock fell 69 percent in calendar 2008, compared with a
54 percent decline in the subindex.
TV TURNAROUND
Nikko Citigroup raised its rating on Sony to "buy/high risk"
from "hold/high risk", citing expectations for accelerated
restructuring, and it raised its target price for Sony shares 5
percent to 2,200 yen from 2,100 yen. [nTFA004310]
"We see evidence of a new importance being attached to speed
and detect a readiness to reform," Nikko Citigroup analyst Kota
Ezawa said in a note to clients.
One of the top priorities for the new management is to stop
bleeding red ink in its TV operations, which have been losing
money in recent years despite Sony being the world's No.2 LCD TV
maker behind Samsung Electronics Co Ltd <005930.ks>.
Stringer's ties with the electronics division are not as
close as those of Chubachi, who has been with the unit through
his career at Sony, making it easier for Stringer to take drastic
steps with the TV operations -- including withdrawal, Akino said.
As part of the overhaul unveiled on Friday, Sony plans to set
up two new business groups, one of which covers network-oriented
products and services such as PlayStation video game operations
and Vaio PCs, with the other handling TVs and digital cameras.
WIRELESS FUTURE?
Sony plans to make 90 percent of its electronics products
categories network-enabled and wireless-capable by the end of
March 2011.
This strategy, the company's recent move to shed its
manufacturing assets and the fact that Stringer is replacing
Chubachi, a seasoned engineer, suggest Sony is transforming
itself to a software-oriented company like Apple, Daiwa Institute
of Research analyst Kazuharu Miura said.
"Apple does not put a cutting-edge microchip in the iPod, and
touch screens are not exactly new technology. But it expanded its
market share with improved user-interface and applications such
as iTunes," Miura said.
"Sony is probably heading towards that direction."
Miura warned, however, the shift comes with a considerable
risk for a company that has prided itself on manufacturing
prowess.
"If the transformation failed, it would lose everything. It's
like crossing the Rubicon," Miura said.
"The company sold some microchip output facilities and it may
also sell some other electronics components assets. It is likely
to shed hardware-related engineers. Once such steps are taken,
there's no going back."
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