Sony and CEO Stringer's Last Failure?

Sony (NYSE: SNE) has made another in a long line of disappointing announcements about earnings. This one should cost chairman and CEO Sir Howard Stringer his job. He has been a failure as chief executive for too long.

The Japanese consumer electronics and movie studio company said it expects its fourth consecutive annual loss. It blamed floods in Thailand for supply chain interruptions. That is beyond Stringer’s control. So is the value of the yen, which also affects Sony’s financial numbers. What Stringer can manage is that Sony’s TVs and PCs have become commodities, and consequently their prices have continued to slide.

Sony operates in a world in which traditional PCs earn less and less of the sector’s market share with the rise of tablets and smartphones. Sony has not made any incursion into the tablet business, which Apple’s (NASDAQ: AAPL) iPad and Samsung’s Galaxy II dominate. Sony also has had no success in the smartphone industry. Its smartphone joint venture with Ericsson (NASDAQ: ERIC), which Sony will soon own entirely, has lost market share to more nimble competitors such as HTC and Samsung. In other words, Sony has done nothing right in the consumer electronics segments.

Stringer was promoted to CEO in 2005. One reason for his appointment was that Sony’s board believed the company had become too insular after decades of Japanese management. It turns out that the Japanese management that created the wildly successful Walkman and PS2 almost certainly would have been better stewards to take Sony forward into the world of the iPod and BlackBerry — and beyond to the current generation of consumer electronics.

Sony’s board has a chance to begin a turnaround and restructuring of the company. But Sony’s fortunes have deteriorated so rapidly that time is nearly up. Another year with Stringer at the head will push Sony into a permanent position as a second-tier firm.

Douglas A. McIntyre