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Last updated: October 31, 2006 1:45 am

Sony chief breaks his silence

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Sir Howard Stringer, Sony’s chairman and chief executive, on Monday broke his public silence over the electronics group’s technical problems and consequent profits warning, saying the setbacks were a natural consequence of making “cutting-edge” products.

“When you practise innovation you run risks,” Sir Howard said at a press conference in Beijing, adding that the difficulties the company had mass-producing a laser diode needed in the PlayStation 3’s Blu-ray DVD player were “part and parcel of what happens when you are on the cutting edge”.

But he surprised some observers by comparing Sony’s pioneering spirit with that of Airbus, the European aircraft maker that has been dogged by managerial infighting and repeated delays to its A380 superjumbo project.

Sir Howard’s comments come amid claims that Sony’s top management failed to respond promptly and effectively to problems with the PS3 and a global laptop battery recall.

While technical problems have already compromised PS3’s crucial pre-Christmas launch, Sir Howard insisted the product was winning favourable reviews from advance testers in the US.

“The point is that the PS3 is already finished and it’s been deemed a creative success . . . and in the end that’s what counts,” he said.

Sir Howard’s comments are unlikely to mollify investors upset by Sony’s announcement last week that operating profits this year were set to be 62 per cent below previous forecasts, and 78 per cent down on 2005.

The group blamed the decline on a Y51bn ($434m) charge related to its global battery replacement programme and poor sales of its PSP handheld game console.

Ryoji Chubachi, Sony president, has not talked publicly about the PS3 problems and neither he nor Sir Howard has commented on the profits warning or global battery replacement programme.

“Their explanation [for the problems] is insufficient and they have been late in dealing with them,” said Fumio Osanai, electronics analyst at UBS Securities in Tokyo.

Some analysts say the PS3 delay has exposed a worrying lack of co-ordination between Sony Computer Entertainment, which makes the games console, and the parent company, which manufactures the semiconductors and other key components.

Mr Osanai said Sony had also failed to capitalise fully on potential synergies between its hardware and software operations. “I don’t think [Sir Howard] is doing his job at all. What he needs to do is place the PS3 as the hub and connect the hardware and software, such as movies and music, and build an environment for users to be able to access content through the PS3.”

Criticism of Sir Howard and Mr Chubachi has been fuelled by their decision to have less senior executives handle public announcements on the PS3 and battery problems. “I would have preferred Mr Chubachi to have spoken [about the battery problem] because he is responsible for consumer electronics,” said Masahiro Ono, electronics analyst at Morgan Stanley.

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