Will Sony Fire CEO as Company Posts Another Loss?

Apps & Software

Published: September 17, 2014 4:43 am

Last Updated: September 17, 2014 6:31 am

Call it another year of financial loss. The year has not ended, but Sony Corp. (NYSE: SNE) says the red ink for its current fiscal period is imminent. The means the turnaround of CEO Kazuo Hirai has failed. He was promoted after years of failure by his predecessor Howard Stringer. Kazuo Hirai has held the job since April 1, 2012. With each new quarter, he has predicted better days.

Much of Sony’s loss will be due to its Mobile Communications unit. The company has lost confidence the unit can grow, due to harsh competition, which includes (although Sony does not say so) Samsung and Apple Inc. (NASDAQ: AAPL).

As a result of revising the Mobile Communications (“MC”) segment’s Mid-Range
Plan (“MRP”), as discussed below, Sony Corporation will record an impairment charge of approximately 180 billion yen, the entire amount of goodwill in the MC segment, in the second quarter of the current fiscal year

Sony’s new forecast is for a 230 billion yen, compared to its guess of 50 billion yen made in July. There was no chance in the forecast for revenue for the year that will end on March 31. 2015.

Sony has to face a dilemma if it wants a new CEO. Much of the company’s business, including its huge entertainment unit, is based in the United States. Stringer came from the U.S. operation. Or Sony can pick another Japanese executive, although it is hard to imagine the person could come from Sony’s current ranks.

Sony’s final alternative is to make a search outside the company. That would mean a decision to bring in an executive to the CEO job. Sony has never done that.

What executive would want the job to turnaround such a huge failure. Because of that, ironically, Kazuo Hirai could keep his job for awhile.

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