Will Sony Be the Next Japanese Electronics Dynasty to Fade?

Sony is splashing out on acquisitions, and debuting new ultra high-definition TVs. But can CEO Kazuo Hirai turn the firm around, or will it become another example of Japan's troubled tech sector.

Published

9 months ago

Categories

Technology, Finance

Topics

Consumer Electronics

People

Kazuo Hirai

Places

Japan, Tokyo

Companies

Soni Kabushiki Kaisha

Transcript

Camera maker Olympus, rocked by scandal. Century-old Sharp, left soliciting cash. Are they the outliers among Japan's electronics dynasties? Or an early warning sign of what's next for the country's top tech names? (SOUNDBITE) (English) REUTERS REPORTER, JON GORDON, SAYING: "We can all remember when Japanese tech giants like Sony absolutely dominated the consumer tech space, but the game has changed. They're looking increasingly irrelevant and financially precarious." Since charismatic Sony CEO Kazuo Hirai took over in April, the firm's value has plummeted by around $8 billion dollars. And even as profits shrink, he's been splashing out on acquisitions, spending $1.8 billion dollars in the past three months on everything from cloud gaming to medical equipment. Making the rounds at Tokyo's electronics fair CEATEC, the Sony chief defended his M&A fest. (SOUNDBITE) (English) SONY CEO KAZUO HIRAI, SAYING: "We are very mindful of our cash position. At the same time, as you probably know, we've also been realigning our business portfolio, and we have sold off some of those assets as well to generate cash. And so again it's just a matter of making sure we keep that balance." Ratings agency S&P disagrees. It downgraded Sony's debt rating to just two notches above junk last month. Most analysts polled by Reuters StarMine remain on the fence, with a neutral rating for the company. Sony's troubles though aren't just about the numbers, they're also about its working culture, according to CLSA strategist Nicholas Smith. (SOUNDBITE) (English) CLSA STRATEGIST, NICHOLAS SMITH, SAYING: "Essentially with a company like that, like Apple, you need a geek in charge that is excited about his product." One glimmer of that new magic comes in the new 4K ultra-high definition TVs. After the disappointment that was 3D, this may be the tech needed to finally revive the company's money-hemorrhaging TV unit. But that will take time, and until then, investors will continue to demand a clearer picture of the company's turnaround strategy.