TOKYO – Sony Corp. (SNE) will name the British-born head of its U.S. operations, Howard Stringer (search), as chairman and chief executive, according to sources familiar with the situation, a rare move for a major Japanese company to give its top post to a foreigner.
Sony's (search) board will agree to appoint the 63-year-old Stringer at an extraordinary meeting in Tokyo on Monday morning, a source at the company said. Current CEO Nobuyuki Idei (search), 67, will step down to take responsibility for slumping earnings after five rocky years at the helm.
President Kunitake Ando will also lose his job, the source said, to be replaced by Ryoji Chubachi, an executive deputy president currently in charge of electronics parts and production operations.
Stringer and Chubachi will face the difficult task of boosting profitability at Sony, a sprawling conglomerate whose core electronics division has been in and out of the red amid tough price competition and a lack of hit products.
Under Idei's watch, the inventor of the Walkman has been outmaneuvered by rivals Sharp Corp. and Matsushita Electric Industrial Co. in flat panel TVs and lost its lead in the portable music industry to Apple Computer Inc. and its popular iPod player.
Shares of Sony rose 1.75 percent to 4,080 yen as of midday, boosted by hopes for new management. That outperformed the benchmark Nikkei average's 0.68 percent gain.
"It looks like the rainy, cloudy weather that's been hanging over Sony could turn sunny," said Kazunori Ohtomo, senior fund manager at STB Asset Management. "Up until now I haven't really been paying much attention to Sony's stock but now I will be watching the issue closely," he said.
A native of Wales who holds dual British and U.S. citizenship, Stringer will become the first foreigner to run Sony, a company established by engineers in 1946 as a maker of telecommunications and measuring equipment following the end of World War II.
Sony will likely announce its intention to make the proposed management changes before noon (10 p.m. EST) on Monday. They are expected to become official at a board meeting scheduled for after a general shareholders' meeting in June.
Stringer will no doubt face comparison with Carlos Ghosn, the Brazilian-born head of Nissan Motor Co. who raised the bar for foreign executives in Japan by saving the automaker from near failure with aggressive job cuts and bold reforms.
"Considering that Stringer has been in charge of the U.S. and he is a contents man, his appointment comes as a bit of a surprise," said UFJ Tsubasa analyst Kazuya Yamamoto.
"But it appears that Chubachi will take the lead in bolstering the electronics division, which has to be Sony's main concern."
Sony is more than halfway through a three-year restructuring plan in which it aims to reduce fixed costs by 330 billion yen ($3.15 billion) by rationalizing production, streamlining procurement and cutting jobs, but profit margins remain still razor-thin.
In January Sony slashed its operating profit estimate for this business year by 31 percent, citing sharply falling prices of televisions, DVD recorders and other key products and weak demand for chips.
The downward revision was the latest blow to investor confidence in management, still reeling from the "Sony Shock" in April 2003 when it unveiled a $1 billion quarterly loss that triggered a two-day, 25-percent slide in the company's shares.
UFJ Tsubasa's Yamamoto said it would be impossible for Sony to reach its goal of an operating profit margin of 10 percent in the business year to March 2007. The company is forecasting a margin of 1.5 percent in the current financial year.
"We could see new management come up with some new targets for the next two or three years," Yamamoto said.
Stringer, currently head of Sony Corp. of America and vice chairman in charge of the company's entertainment business division, had a 30-year career as a journalist, producer and executive at Viacom Inc.'s CBS television network.
He joined Sony in 1997. Known for his skills as a deal-maker in the entertainment industry, Stringer, 63, oversaw the acquisition of Hollywood film studio Metro-Goldwyn-Mayer by a Sony-led group last year.
He became a U.S. citizen in 1985.