Sony CEO Hirai to step down, turnaround ally Yoshida to take helm

TOKYO — Japan’s Sony Corp. said CEO Kazuo Hirai would be handing over the reins to finance chief Kenichiro Yoshida, while it also hiked its annual profit forecast further to a record that highlights the revival in fortune they have both engineered.

The change in helm, while a major surprise, is expected to go down well with investors who have been pleased with Yoshida’s no-nonsense approach to restructuring after he became CFO in 2014.

Once a market leader in consumer electronics, the maker of the Walkman and Trinitron TV fell behind the likes of Apple in innovation after the release of the iPod in 2001 and then the iPhone in 2007. It then also lost out to more nimble Asian rivals in price competition.

Hirai and Yoshida together streamlined Sony’s unprofitable electronics businesses and then capitalized on the spread of smartphones with image sensors.

People familiar with the 58-year-old Yoshida describe him as a reserved foil to the more flamboyant “Kaz” Hirai, but also a forceful partner who pushed through many controversial changes, including the sale of its Vaio PC division and spinning off its TV business.

Vindicating those measures, Sony quadrupled its profits to mark its best-ever third quarter, helped by robust demand for image sensors as smartphone makers increasingly adopt dual-lens rear cameras, as well as strong sales of gaming software for the PlayStation 4 console.

That prompted the 72-year-old company to lift its annual operating profit to ¥720 billion ($6.6 billion) for the year through March, versus a prior forecast of ¥630 billion that would have also been a record high.

Yoshida’s next challenge is to make sure Sony keeps up this momentum even after the impact of restructuring and demand for image sensors wear off, analysts said.

Yoshida told a news conference Sony needed to become more competitive globally as it is now dwarfed by rival tech companies in terms of market value. The Japanese firm is worth some $63 billion — less than a tenth of Apple’s market capitalization.

Known for imposing discipline and getting the job done, Yoshida had rattled some parts of the company, including its Hollywood studio business.

Leaked e-mails from a hack at Sony Pictures show the then CEO of Sony Entertainment, Michael Lynton, confiding to studio co-chair Amy Pascal that he was under “enormous pressure” after Yoshida sought a review of executives’ pay.

Yoshida will be taking on the top job at Sony on April 1, replacing Hirai who has been CEO since 2012. Hirai, 57, will stay on as chairman.