Sony's first foreign chief signals shake-up

Sir Howard Stringer, appointed as the first foreigner to head up Japan's Sony, pledged to shake up the electronics and entertainment giant and end its comparatively lacklustre record.

The Briton, who yesterday became only one of a handful of westerners to reach the upper echelons of the country's business community, admitted the corporation would not hit its target of a 10 per cent operating profit margin in all divisions by March 2007.

However, he added that the target was "worth leaving out there to fight for and improve management". He told a meeting of the company's management in Tokyo: "We have to make Sony executives hungry."

Sir Howard, who becomes chairman and chief executive, has been responsible for Sony's US business, including its movies and music divisions. Unlike most of Sony's previous leaders, his background is in television news and production rather than engineering.

He went to the US more than 30 years ago and commutes between New York and the UK, where his family is, and in Tokyo yesterday he was challenged about the fact that he cannot speak Japanese and will not be based in Tokyo.

The Welsh-born 63-year-old said he "didn't think it mattered" whether he was in Tokyo or not. "I don't live in Hollywood, but I'm responsible for the movie business. I don't sing songs, but I'm responsible for the music company," Sir Howard said.

"This is a truly global company and most of us speak very good English, particularly the women, and I think I will manage the best I can and I will need a lot of help," he said.

The man he is to replace, Nobuyuki Idei, the current chairman and chief executive, agreed: "Sony has always embraced dialogue between different cultures. We have more non-Japanese than Japanese employees. Seventy per cent of our sales are outside Japan. I don't feel this goes against the grain of Sony culture."

Japan's chief cabinet secretary, Hiroyuki Hosoda, said it "wouldn't be unnatural" for such an appointment to take place, given the internationalisation of Japanese companies. But it is still rare for Japanese firms to have foreign bosses, with the appointment in the late 1990s of Carlos Ghosn from Brazil to the top job at Nissan the only other notable example.

Japan's stock market liked Sir Howard's appointment, with shares rising 1.5 per cent. Like Mr Ghosn, who was brought in by Nissan's parent, Renault, to slash costs and shake-up its unprofitable relationship with suppliers, Sir Howard is also expected to take a hard line on costs at Sony. The management shake-up represents a recognition that Sony needs to change as it navigates a transformation in its core consumer electronics business. The company that invented the Walkman and dominated the videogame market with its PlayStation machine has increasingly lagged behind in the internet era. Nimbler rivals have beaten Sony to market with new products, such as flat-panel television sets. The rapid rise of Apple Computer's iPod digital music player has reflected badly on the corporation.

Sir Howard, who joined Sony in 1997, has been a leading proponent within the company of boosting entertainment content that can be packaged and sold through products using its electronics technology.

Sir Howard led a consortium last year to snap up the MGM movie studios and has overseen a division that has generated profits for Sony, unlike its electronics arm. Sony's president, Kunitake Ando, will also lose his job inthemanagement overhaul. He will be replaced by Ryoji Chubachi, an executive deputy president in charge of electronic parts and production operations. Mr Chubachi will also serve as chief executive of the electronics business worldwide.

The management changes were approved at an emergency meeting of Sony's board in Tokyo yesterday morning.