TOKYO -- When Kazuo Hirai took the helm at Sony in June 2012, the company had just posted a record net loss. Six years later, Hirai has passed control to his right-hand man, Kenichiro Yoshida, with the electronics maker set to log a record operating profit. Hirai's refusal to kick problems down the road is a big reason why.
Hirai succeeded Howard Stringer after four straight years of red ink. In the last of those years, Sony suffered a net loss of 456.6 billion yen ($4.27 billion at the current rate). As chief, Hirai produced immediate results, lifting the company back into the black in fiscal 2012 by selling real estate and shareholdings.
But he was only getting started. The restructuring of the loss-laden TV segment and other businesses was still to come.
Determined not to postpone real change, Hirai turned to Yoshida, who would go on to serve as executive deputy president and chief financial officer before taking the top job. With Yoshida drafting the plans and Hirai making the decisions, the pair moved to revamp struggling operations.
The TV business, which had logged a 200 billion yen operating loss for Stringer's last fiscal year, returned to profit three years later thanks to a roughly 50% cut in production to slightly above 10 million sets.
The PC business was sold to an investment fund while battery operations were offloaded to Murata Manufacturing. The division for the development of organic light emitting diodes merged with its counterpart at Panasonic. The moves were painful, and Sony's net losses ballooned back to more than 100 billion yen for both fiscal 2013 and 2014.
But Hirai did more than unload assets. He forced Sony to face reality and overcome its hubris.
In autumn 2014, management made the decision to skip dividend payments for the first time since the company went public. Sony had made the payouts even for the disastrous fiscal 2011. It was time to stop pretending to be in good shape.
The results speak for themselves. Sales for the just-ended fiscal 2017 are estimated to have risen 12% on the year, to 8.5 trillion yen. Operating profit likely soared 150% to 720 billion yen, the first fresh record in 20 years. The company's market capitalization has expanded to 6.6 trillion yen, 3.9 times the 1.7 trillion yen figure when Hirai became president.
Of course, much has changed in the technology sector in the last six years. While Sony was trying to get back on its feet, Google and Amazon.com were expanding their empires. Samsung Electronics' operating profit is nearly eight times that of Sony.
The Japanese company is only at the start line, when it comes to competing with these giants. The first challenge of the Yoshida era will be to create another hit product besides the PlayStation 4.
