Sony Samsung Relationship Not Dead
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The President of Sony has rebuked the head of Sony TV by claiming that Sony is considering an additional investment in its joint LCD TV venture with Samsung.

Only days after Makoto Kogure, head of Sony’s TV group, was quoted  as saying that Sony is considering an investment in Taiwanese LCD TV screen maker M&A as opposed to continuing to invest in S-LCD, its joint venture with Samsung Electronics the President of Sony Ryoji Chubachi has said the opposite claiming that Sony is considering making an additional investment in its liquid crystal display joint venture with South Korea’s Samsung Electronics Co. Ltd.

Sony and Samsung formed a $2.6 billion  joint venture in 2004 to produce liquid crystal display (LCD) panels for flat TVs. Called S-LCD, the venture began shipments of panels in April and is expected to reach full capacity next year.

“We are studying (an additional investment in S-LCD). It would be the most reasonable choice,” Ryoji Chubachi told a roundtable with reporters. He said, however, that nothing concrete had been decided.Chubachi also said Sony planned to write down about 60 billion yen worth of cathode ray tube television assets in the business year to next March as it shifts resources to more promising flat TVs. Sony officials said the impact was already included in the company’s earnings forecast for the business year.

Chubachi’s comments come after Sony last week unveiled a new restructuring plan, vowing to cut 10,000 jobs, or about 7 percent of its work force, sell non-core assets and downsize or withdraw from unprofitable businesses.

During his chat with journalists Chubachi denied reported divisions in the management team  insisting that the Japanese company’s leadership is united and doing all it can to revive its sagging fortunes.

“There are no contradictions or conflict. I can say with confidence we stand together,” Chubachi, who also heads Sony Corp.’s electronics division and is chief operating officer, told reporters at the company’s headquarters here.Chubachi and Chief Executive Howard Stringer — the new international team heading Sony — announced a revival plan Thursday last week centered mainly on boosting profits at its electronics unit, which has lost money for two straight fiscal years because of the plunging prices of electronics products and the onslaught of cheaper Asian rivals.

The latest shake-up calls for slashing 10,000 jobs, or about 6 percent of Sony’s global work force, by the end of March 2008. It will also close 11 of its 65 plants and shrink or eliminate 15 unprofitable electronics operations. Chubachi refused to disclose the 15 areas, saying that merely identifying them will hurt Sony’s business.

The Financial Times reported over the weekend comments from Welsh-born Stringer, the first foreigner to head the electronics and entertainment company, saying the restructuring plan had not gone far enough and conceding that Japan’s “humanitarian” culture in offering stable employment had made dramatic job-slashing difficult.

But a visibly excited Chubachi, who punctuated his comments with fiery declarations and friendly banter, said management remained united.

He appreciated the differences in opinion that officials from Sony’s various sections brought in hammering out the revival plan, he said, although he said he has not confirmed the reported comments with Stringer.

“Of course there is never going to be a day when the CEO, COO and people in the entire company are suddenly all going to come up with the same answer,” Chubachi said.

Sony, which also has a sprawling entertainment empire including music, movies and video games, said last week it would likely report a 10 billion yen (US$89 million; euro74 million) loss for the fiscal year ending March 31, 2006, mostly from restructuring costs. Previously, it had predicted a 10 billion yen net profit.

That would be the company’s first full-fiscal year loss since 1994, when it lost nearly 293 billion yen (US$2.6 billion; euro2.2 billion), largely on a write-off for Columbia Pictures that Sony acquired in 1989 for what some considered a higher price than its market value. But today’s crisis may be more critical because the core electronics business was profitable in fiscal 1994.

On Monday, Moody’s Investors Service put Sony’s ratings on review for a possible downgrade, citing doubts about the new strategy. Other analysts have also criticized it as sounding much like other plans to streamline corporate structure.

But Chubachi said Sony will answer skeptics with gadgets that offer brilliant image quality tailor-made for the digital home, although he refused to give details.

Sony is promising to focus on “champion products” with growth potential, such as the PlayStation 3 next-generation console, Bravia liquid crystal display televisions and Walkman MP3 music players.

Chubachi compared Sony’s plight to the Yomiuri Giants, the Tokyo baseball team that’s doing poorly this season, and said his company is being expected to deliver dazzling products like home runs and shutouts.

“I hate it when the Giants lose,” Chubachi said with defiance. “And I hate it when Sony loses.”