Sony CEO Reaffirms Profit Margin Goals

Encumbered with a huge global recall of faulty laptop batteries and PlayStation 3 production delays, 2006 has been a turbulent year for Sony. Nonetheless, its CEO, Howard Stringer said the company is prepared to meet its operating profit margin goal of 5% for the next fiscal year (March 2008). Note: Sony’s operating profit margin was 3.9 percent last year.

(News Source: AP; By May Wong AP Technology Writer; LAS VEGAS Jan 8, 2007)

Speaking before a group of reporters at the International Consumer Electronics Show, Stringer said he still needs to assess with other top executives how various Sony divisions will help steer the battered behemoth back to health.

Sony last year set a target of reaching an operating profit margin of 5 percent for the fiscal year ending in March 2008.

“I have ideas where we could get the money, but I could be wrong,” Stringer said, adding that he needs to first hear from a number of Sony units about their performance during the holiday quarter.

In October, Sony reported a 94 percent drop in profits for its third quarter, due largely to a global recall of faulty laptop batteries and losses in its gaming division related to the PlayStation 3 rollout.

Stringer declined to cite the importance of one division over another in Sony’s recovery but stressed that the company’s former practice of allowing one unit’s success to cover the losses of another is history. “We have to get used to the idea that the right hand can make money just like the left hand,” Stringer said.

After falling behind rivals in key products such as televisions and music players, electronics sales now face a more positive outlook, according to Stan Glasgow, president of Sony Electronics in America.

Aided in part by robust sales of its Bravia line of TVs and home audio products, Glasgow said the electronics unit was now seeing gross margin profits of 4 percent, he said. Startup costs for the PlayStation 3 have been hefty but Stringer said he expects the game console to break even by the end of the year.

U.S. sales of the Sony Reader, an electronic book reader, are also doing better than the company expected, Stringer said. Sales of downloadable e-books are exceeding the sales of music on Sony’s online Connect Store.

A new Reader model, likely adding wireless capability, will likely appear within the year as new rivals, namely Amazon.com, are expected to enter the market, he said.