It’s been a tough few years for Japan’s electronics giants. Once dominant on the world stage, these household names have been brought low by factors that have included an overpriced yen, competition from lower-cost producers, poor product choices, and outdated management.
At least outside Japan, Sony is probably the marquee name for Japanese electronics. Associated with the Walkman and its nationalistic founder, the late Akio Morita, the company has built a vast and sprawling empire, ranging from movie studios to its most profitable business, selling insurance.
In more recent times, the company has been linked with a run of extraordinarily bad luck, from the 2011 tsunami to hacking attacks. It reported a net loss for four consecutive fiscal years, from 2009 to 2012. While its financial services arm has been profitable, the company has consistently bled money from the electronics business with which it is synonymous. Its shares have lost nearly 85 percent of their value since 2000.Enjoying this article? Click here to subscribe for full access. Just $5 a month.
Little wonder, then, that investors have been circling. Hedge fund manager Daniel S. Loeb, who owns a 6.5 percent stake, emerged recently with a call to break up Sony, by spinning off part of its huge entertainment business.
But could the Japanese giant be on the verge of a comeback? This year, for the first time in five years, Sony reported a profit, with net income of 43 billion yen ($426 million), compared to a 457 billion yen loss last year. Enthusiasm should be tempered with the recognition that this result was partly attributable to the gains on the sale of certain assets, including its U.S. headquarters building, and partly because of another good year for its financial services business.
Meanwhile, the company enjoys a tailwind from the much-vaunted Abenomics, which offers both a weaker yen – which makes Sony more competitive and enables head office to report better results in yen terms – and the first indication that Japanese consumers are starting to spend.
Clearly, Sony has a long road to travel, most notably with some serious restructuring still needed in its core hardware segments, which continue to struggle. But after a long run of bad news, and some serious hits to its brand, 2013 may just possibly be the year when the company begins to turn things around.