IP: INTERVIEW: Sony's Idei Will Put House in Order to Reap Future Benefits

[David Farber <dave () farber net>]

INTERVIEW: Sony's Idei Will Put House in Order to Reap Future Benefits

January 7, 2002 (TOKYO) -- Sony Corp. shares are considered the barometer 
of the Japanese economy. The Nihon Keizai Shimbun asked Chairman Nobuyuki 
Idei about what the company has in store for next fiscal year.

Interview excerpts follow:

Q: Do you still feel the ripples of the bursting of the information 
technology bubble in the U.S. and the Sept. 11 terrorist attacks?

A: The terrorist attacks plunged the global economy into a whole new 
environment, and the IT bubble confusion has been exacerbated by wartime 
tensions. So we have re-crunched our annual budget figures and will see 
them monthly. This year, we will continue our offensive stance, but the 
main focus will be more defensive.

Q: Traditionally, your plans for a new fiscal year have focused on your 
vision of the future. What about this year?

A: Our strategy for fiscal 2002 is to conduct a bucket relay. No matter how 
badly management wants to dream of the future, we have to first extinguish 
the fire in front of us. I want our fiscal 2002 plan to be one that shows 
we do what needs to be done, not one that aims to please the masses.

So we will first reduce fixed costs to lower the break-even point. Then we 
will shrink inventory to speed up turnover and limit investments to those 
within the realms of our profit and depreciation. And we will thoroughly 
check and see if our EVA (Economic Value Added) surpasses the charge for 
capital at every level in our core operations as well as peripheral businesses.

Q: Will you reconsider the business model of a package consisting of the 
Internet, hardware and content?

A: We will stick to our plan on strengthening such services. Had we not 
sought the fusion of audiovisual with information technology starting in 
1995, we would've missed our next opportunity.

Q: Sony hasn't surpassed the record 520 billion yen operating profit it 
marked in fiscal 1997. Why is that?

A: It's mainly due to fluctuations in foreign exchange rates, namely a 
strong yen. General Electric's former chairman, Jack Welch, recently said 
he would produce products on a ship and say he made them in a country with 
a weak currency.

Q: Is it not possible to change the earnings structure that is now 
vulnerable to economic cycles?

A: Our vulnerability is our charm. We can't imitate Toyota Motor's 
stability, and we might fail if we try. Our value is reinforced every time 
we survive a crisis.

Q: But Sony maintains a stable dividend of 25 yen per share.

A: Shareholders will be rewarded if they hold onto stock for a long time, 
and dividend payouts are just a part of such returns. We do want to 
reconsider our payout policy, but we don't have the energy to discuss that 
at this year's shareholders meeting.

Q: Aren't investors losing trust in information technology firms, Sony 
included, because of their repeated downward revisions to earnings projections?

A: To be honest, I can't predict how things will be in a year. I feel it's 
useless to estimate earnings based on the assumed foreign exchange rates 
and convert them into yen when expenses are incurred in Japan, products are 
made in China and they are sold in Europe. But we hope to disclose figures 
in a way that will not mislead our investors.

(The Nihon Keizai Shimbun)\

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