Hirai faces fight to win the hearts of new generation of teens

When Kazuo Hirai was deciding what to do with his life following university in Tokyo, his obsession with technology saw him waver over a career in one of Japan's two defining industries: cars or electronics.

The banker's son eventually opted for Sony, the Japanese electronics group that had earned a special place in his teenaged heart when it gave the world the groundbreaking Sony Walkman.

But almost thirty years on, after a classic salaryman rise through the ranks to the helm of the entertainment and technology group, he is fighting to restore it to health.

This week Sony slashed its full-year net profit forecast by 40 per cent and fell back into the red for the second quarter. That was a blow given the group's apparent recovery, after earlier this year posting its first annual net profit in five years following a bout of restructuring, and dashed hopes that it had put the worst behind it.

Mr Hirai, who took the helm in April last year, has what appears to be a straightforward plan: restructure the ailing electronics division and restore Sony's reputation as a developer of cutting-edge products.

Just as for his predecessor Sir Howard Stringer, a large part of that task involves strengthening the links between the various parts of the sprawling business.

His flawless English and Japanese along with his understanding of the market in the US, honed during periods spent travelling and residing there as a child and young executive, are considered assets in that regard.

Unlike Sir Howard, the 52-year-old Mr Hirai, a keen photographer, is also known for being hands-on when it comes to experimenting with new technology.

He has implored his employees to take more risks in product design and, as evidence that he is being heard, lauds the recent launch of Sony's QX10 camera lenses, which can be attached to its smartphones to take high-quality pictures.

"QX10 is what people expect Sony to do," Mr Hirai told journalists recently, adding at that time: "We're back - not fully - but we're back to where the business heads are willing to take more risks with these advanced products."

For now, Sony is staking its reputation and growth hopes on its Xperia smartphone range and its PlayStation 4 game console, setting an initial sales target of 5m for the latter.

But deep structural challenges remain, namely the sliding profitability of consumer electronics, particularly televisions.

Once a core Sony product, their global market share has halved from 12 per cent in 2006 to 6 per cent last year.

The group has reported a five-year average negative return on equity of 5.43 per cent, against an average positive return of 14.51 per cent for other large global media and consumer electronics companies.

And there are signs investors are growing impatient.

Earlier this year Daniel Loeb, the activist US hedge fund investor, made a public call for the company to spin off part of its film and music business, which Sony rebuffed.

Sony's promises that it still expects a full-year profit are unlikely to salve disappointment: shares in the group fell more than 11 per cent on Friday, the day after the forecast cut.

The affable Mr Hirai has already paid an economic price for some of Sony's woes. This year he and 39 other executives gave up their bonuses after they failed to make good on a pledge to return the consumer electronics division to profit.

The next three months, coinciding with the busy Christmas season, will be critical in determining whether Sony is still on track to make a comeback.

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