The Wall Street Journal is reporting that several senior executives at Sony are preparing to take pay cuts ahead of the detailed annual results expected for release Wednesday, May 14th. Among the senior execs is CEO Kaz Hirai who is believed to be taking a whopping 50% cut in salary in addition to turning down his bonus.
The salary-slice comes after Sony announced earlier this month it’s forecasted results for the year 2013 which saw a reversal of last year’s gains. A slim operating profit based on a jump in sales on the previous year still resulted in a net loss of ¥130bn / $1.27bn / €929m.
The report, if true, raises some serious questions for Sony’s operations at a time when it should be enjoying the benefits of PS4, imaging and Xperia smartphone success. More than that, the 4th annual loss in 5 years is attracting searing attention at Kaz Hirai’s viability as CEO.
What else is coming out of the full results?
The hot air in the balloon
It’s a bittersweet time for Sony. Today perhaps may be more on the bitter side however, when the full details of the corporation’s past year fiscal results are released, which will likely be mauled by investors, rating agencies and journalists. The highest profile product right now is likely the PlayStation 4, which has shot past 7m units in sales. Note sales here, whereas rivals are known for celebrating shipped units – which sit in shops unsold. For the launch window of this current generation of gaming, Sony has clearly scored victory.
Just a few years ago, who heard of a Sony phone? Now? Xperia Z, Z2, Tablet Z, Z2 – and all of the letters of the alphabet in between. Recent years have seen a surge in popularity for Sony smartphones – an extremely valuable source of growth for the future. The prediction from the end of the Q3 forecast was that the company would ship 2m fewer Xperia smartphones than targeted for the full year, instead to come in at 40m. That’s nothing to be ignored when lesser rivals have limped out the Apple/Samsung war, or didn’t make it at all.
Imaging products continue to be a success, ranging from television to movie studio equipment, to action cams and simpler holiday-snappers. Just yesterday we reported on a range of awards the company received for ‘best in category’ imaging products. This area remains as one of Sony’s three priority areas, as referenced multiple times in management topics available on their website. It also came to light recently just how profitable imaging sensors is for the corporation, with Sony being a leader in the area.
A surprise to some fans may be that the corporation’s most profitable area in recent times has been financial services. More specifically, insurance that is sold only in Japan. The Japanese corporation has been diversifying it’s portfolio since Kaz Hirai came into office in 2012, even branching into medical devices.
Last Autumn, things were looking so good for Sony, it seemed like they had turned a corner and were moving onwards and upwards again.
The hole in the balloon
If these products are performing so well, then what isn’t?
When Sony unveiled it’s initial results forecast for the 2013 year, they referenced two problematic areas: the PC business (who isn’t face-palming at hearing that again) and disk manufacturing. Amazingly, the stock price held at the time:
The bottom line is that the sale of the PC business, whether the right or wrong course of action, seems to be the fiscal equivalent for Sony of a resident granny that breaks unholy wind at the most inappropriate time and now the family is getting tired of it. The disk manufacturing is an unexpected bombshell arising from a sharp drop in physical media sales in Europe. The TV division as we know will be separated from the core of the corporation but will remain a part of Sony, for now. And? That can’t be it, right? We will take a closer look at the full results which are due today to find out what else is sinking the Sony balloon. Let’s hope we find out more why the the CFO recently exited quietly from the company.
Image credits: title image, intact balloon, not so intact balloon. Thanks to Yahoo Finance for stock data.
Discuss:
Is this move by senior execs enough? Will the CEO survive a 4th annual loss in 5 years? What would you change at Sony Corp?
[Wall Street Journal, Via IGN]