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Japan's Sony to reorganize key businesses

By JAY ALABASTER
The Associated Press
Thursday, March 10, 2011; 1:35 AM

TOKYO -- Sony Corp. said Thursday it will reorganize its main electronics businesses and promote the star of its gaming operations to lead a new consumer products division.

The massive new consumer group will be led by Kazuo Hirai, a rising executive who has overseen a recovery in Sony's video game business. The move likely sets the stage for him to one day take over for current CEO Howard Stringer.

The iconic company said it will combine the vast array of products that have made it famous with consumers - including TVs, video games, PCs and mobile phones - into the group. A second main division will be formed with the company's digital components and business-facing products.

Tokyo-based Sony remains a household brand name, but has lost much of the glow from years past, when products like its Walkman portable music players transformed the electronics industry. It is currently struggling against flashier rivals like Apple Inc. and behemoth competitors like Korea's Samsung Electronics Co.

Profits have grown in the gaming division under Hirai, with its core PlayStation 3 home console expected to sell 15 million units for the year through March, up from 13 million the previous year.

The company has also generated buzz among gaming aficionados with the recent announcement of a successor to its PlayStation Portable handheld, due to go on sale late this year. Codenamed "NGP," for next-generation portable, it promises flashier graphics on a large screen.

Sony is striving to find a formula for combining such consumer products with its large music and movie holdings, which include the recent movie "The Social Network," about Facebook, and Michael Jackson's "Michael."

In its earnings announcement last month, Sony said that quarterly profit dropped from a year earlier, pulled down by the strong yen and falling TV prices. It also cut its annual sales forecast for the current financial period.

The changes revealed Thursday are to be implemented from the start of the company's next fiscal year that begins in April.

The promotion of Hirai makes it more likely he will one day run the company. In a press release, the company said Stringer would remain in charge, but the reshuffle was aimed at "empowering the next generation of Sony's management."

Hirai, 50, is one of Sony's most charismatic, recognizable leaders. Fluent in English, he has been instrumental in the success of the PlayStation brand in the U.S. and the rise of gaming as a major entertainment platform rivaling movies and television. Entertainment Weekly once named him one of the most powerful executives in the industry.

The announcement came during trading hours on Thursday. Sony shares were down 1.1 percent in the afternoon, compared to a 1.5 percent decline in Japan's benchmark Nikkei 225 stock average.

© 2011 The Associated Press