Sony looks at growth in new business areas

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Sony is close to completing the restructuring of its consumer electronics division and will soon embark on a growth phase in which it will enter new business areas, its president said on Tuesday.

“I would like to complete the large-scale restructuring measures by the end of this fiscal year,” Ryoji Chubachi, Sony’s president, told the Financial Times.

Sony would then “embark in earnest on a strategy of growth, which we had kept a lid on until now”, he said.

The comments come as Sony prepares to celebrate a year under the leadership of Sir Howard Stringer, chairman, and Mr Chubachi.

During that time, Sony has clawed back market share in the critical television market with its Bravia series of liquid crystal display TVs, sold non-core operations and achieved higher profits. In the year to March 2006, Sony increased revenues by 4 per cent to Y7,475.4bn ($64.9bn) and pre-tax profits rose 82 per cent to Y286.3bn, helped in part by selling shares in subsidiaries.

Although the electronics division continued to lose money in the year just ended, due largely to an Y89.3bn loss by its TV division, Sony expects double-digit revenue growth from the division this year. The group has pledged to return the TV business to profitability in the second half of this fiscal year.

Mr Chubachi said he believed he had achieved the goals he set for himself in his first year: to improve staff morale, “to make some money”, and not to talk about the corporate vision for a while.

Thanks to the success of the Bravia line-up, the once ailing TV business, which was the single biggest factor weighing down on profits, now “looks OK”, Mr Chubachi said.

Having recovered its short-term profitability, Sony now needs to invest in new businesses for longer-term growth, he said. “Is it enough for Sony to be in the box business, making stand-alone products, TV, videos, Walkmans or Vaio... is that enough?” Mr Chubachi asked. “Our stakeholders are expecting something in regard to this question... in order for Sony to continue to win,” he said.

The objective was not to increase the production capacity of specific products but to develop new businesses. The acquisition of Konica-Minolta’s single-lens reflex camera assets last year had allowed Sony to enter a new business area. “Sony is starting SLR, not increasing [its digital camera business],” Mr Chubachi said.

Mr Chubachi declined to indicate what new business areas Sony might enter, although signalling they would involve network products.

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