Sony Corp will narrow the focus of its research and development to only promising areas such as next-generation video equipment, mobile phones and flat panel TVs, the company's new president said on June 23. Offering a glimpse of where new management is looking to lead the struggling electronics maker, Ryoji Chubachi also said Sony would continue restructuring its sprawling operations while cultivating new businesses to drive earnings growth.
"While we have not made this public, internally we have been looking at several areas within our R&D from which we could potentially withdraw," Chubachi told a news conference, flanked on his right by Howard Stringer, the newly appointed CEO.
"I can't give details right now on what those areas will be, but I will (in the future) make it clear exactly what we will and will not do," he added, referring to its R&D spending, which is expected to total 520 billion yen ($4.8 billion) this business year.
Chubachi and Stringer were overwhelmingly approved by shareholders on Wednesday, replacing Nobuyuki Idei and Kunitake Ando, who resigned from top management to take responsibility for the company's slumping earnings.
The new management team had told shareholders on Wednesday they would unveil a new strategy in late September to reallocate resources, suggesting they would look to narrow its product line-up or withdraw from struggling businesses.
They did not unveil specifics of that strategy, which has been internally dubbed "Project Nippon".
Welsh-born Stringer said he would use his skills as a communicator to help break down the "silo walls" that have been erected between different divisions of Sony, hampering collaboration and leading to missed opportunities in the market.
"We have to become one highly focused organisation," Stringer said. "We have to talk to each other and we will re-evaluate R&D, rationalise product development, ensuring that the line-up is coherent and focused strategically."
Smiling often, Stringer tried to impress to the media that his first priority would not be to cut more jobs. He acknowledged on Wednesday that it would be difficult to "use an axe" in Japan. "Cost cutting and axes are not solutions to all problems," Stringer said.
Some newspapers have been referring to him as a "cost-cutter" while comparing him to Carlos Ghosn, another rare foreigner at the top of a Japanese company who saved Nissan Motor Co from near bankruptcy by squeesing suppliers and cutting staff.
In his former post as head of Sony's US operations, Stringer oversaw "Project USA", which eliminated 9,000 jobs and achieved annual cost savings of $700 million.
Under the current restructuring plan called "Transformation 60", Sony has already slashed about 20,000 jobs, most of those in its loss-making electronics division. TR 60 is a three-year plan that runs through March 2006. "We are extending Transformation 60.
It was incomplete. It was a very good start but we are examining different priorities for improving the performance of Sony," Stringer said.
Shares of Sony closed down 0.26 percent at 3,880 yen, underperforming the Nikkei average, which gained 0.26 percent on the day.