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Sony Corporation (NYSE:SNE) has turned in lackluster performance over the five years since 2008, failing to find the right combination of product and operating vitality necessary to pull it out of the doldrums it got stuck in during the global financial crisis. Whilst one might not be impressed see Sony’s share price decline 1.4% to $17.94 on the NYSE, stepping back to see the whole picture is more encouraging.
Don’t step back that far! Now you can see the whole five years, all the way back to when it’s share price was trading at more than three times what it is today. Move in a little closer to where you can see only the last six months. That’s perfect. Now, you see the share price steadily and continually gaining ground from its low point.
Today Sony gave investors some real things to get excited about – like an annual profit. Something else that it had not done since 2008. In fact, Sony ended its fiscal year on 31 March with a net profit of $435 million (¥43.2 billion) at current exchange rates. That is a huge difference from last year end’s $4.6 million (¥456.9 million) loss. The total year’s profit was helped by a strong fourth quarter during which Sony turned in a profit of ¥64 billion. The company sustained a ¥255 billion loss during the prior year fourth quarter.
In balance, the favorable exchange rate and the Bank of Japan’s financial policy have contributed to the firm’s good fortunes. But Sony has done its part to return to profitability as well, especially since Kazuo Hirai became CEO in 2012. It trimmed 10,000 jobs as part of its workforce reduction plan, divested its chemical products division, ended some of its joint ventures with Sharp and Samsung, and sold it’s headquarter building in New York for an amount in excess of $1 billion dollars.
CFO Masaru Kato told reporters that “We set out this year with the aim of doing everything we can to get back in the black.” Referring to Sony’s electronics division, which is still operating at a loss, he added that, “This year we absolutely intend to make a profit in electronics.” Which leads me to another interesting insight – one about corporate bonuses.
THIS WOULD BE AN EXCELLENT TIME TO CALL YOUR FRIENDS IN THE UK FINANCIAL SECTOR AND READ THE FOLLOWING PARAGRAPH TO THEM.
Because the company had pledged to return the electronics division to profitability in the fiscal year just ended, but failed to deliver on its promise . . . 40 of Sony’s top executives will voluntarily forgo their annual bonuses! WHAT A CONCEPT! That includes Mr. Harai and Mr. Kato. They won’t take their bonuses just because they showed up, or even because it is clear that they are turning the company around (the electronics division loss was 60% less than 2011). They won’t take the money until they deliver on their entire promise! And, by the way, not taking those bonuses means losing up to half of their annual pay. I don’t feel sorry for the Sony execs. I am proud of them. They are setting an example that ought to be followed. That is the kind of stuff that makes me want to go out and buy another Sony TV.
