We find it hard to believe there’s been a smile on new Sony CEO Kaz Hirai’s face since he started his new high-power role just over a week ago. One look at the company’s balance sheet would be enough to plant a permanent frown on even the most jubilant of personalities.
Indeed, Sony has warned investors today that it expects to announce losses of ¥520billion in its next financial report. To put that figure into perspective, that’s $6.4billion or £4billion according to current exchange rates. In short: an enormous sum of money.
It is, in fact, Sony’s largest financial loss in a decade. It previously reported losses in 2010 and 2008 – neither of which were anywhere near on the same scale as what’s being discussed here.
The reason for the extraordinary loss is due to the write-off of tax credits (primarily in the US) which Sony can no longer use. The company maintains that it expects to start the journey back to profitability next year, with an operating profit of ¥180billion predicted. That’s around $2.2billion.
Of course, to achieve that, former PlayStation president Kaz Hirai is going to have his work cut out. The new CEO is set to reveal his rescue strategy at a conference this week. Around 10,000 job cuts are already predicted.
Sony’s biggest problem at the moment – aside from the troubled yen and its unwieldy corporate culture – is its television business, which is getting stomped by Korean manufacturers such as Samsung. Hirai has promised to turn the business around within two years.
While the task sounds almost insurmountable – Hirai does have form. The executive’s most successful hour was transforming the struggling PS3 into a thriving format through effective cost-cutting and intelligent decision making. Hirai’s overall aim is to unify Sony as a company, blurring the lines between each of its branches and transforming it into a powerful whole.
There's certainly a long, long road ahead – but in Kaz we believe.