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SONY
Inside the Shakeup at Sony
The surprising selection of Howard Stringer as Sony's CEO was a classic boardroom tale of executive intrigue and dashed ambitions.
By Brent Schlender


Nobuyuki Idei was in a quandary. It was mid-January 2005, and the weary Sony Corp. CEO had just received confirmation from his chief financial officer, Katsumi Ihara, of what many around headquarters had dreaded.

Price wars for flat-screen TVs and sluggish holiday sales of other consumer electronics gadgets had undercut financial results for the quarter ended in December. Revenues were 7.5% lower than in the corresponding 2003 quarter, and operating profits, perhaps the truest measure of Sony's strength and agility, were off 13%. Worse, that meant Sony's projected revenues for the fiscal year ending in March were its lowest in five years—$68.6 billion—and 5% below what the company had forecast, something to which Idei would have to fess up both in public and before an increasingly restive board of directors. Clearly, Idei's "Transformation 60" restructuring plan—intended to reinvigorate the company in time for Sony's 60th anniversary in 2006—wasn't working. It was time for a bigger jolt.

True to form for the CEO of a company long known for its unconventional leaders, Idei went out like a maverick. In March he named a foreigner—Sir Howard Stringer, a relative newcomer who had spent the past seven years running the company's U.S. operations—as the next chairman and CEO of Japan's most famous company. And that wasn't all. Idei announced that he had asked six other corporate officers who were fellow "inside" directors to join him in resigning from the Sony board when he steps down officially as CEO this June, leaving the "outsiders" with a hefty eight-to-three majority.

The moves sent a shock wave through the electronics and media industries, and not just because Stringer, 63, is a Welsh-born American who doesn't speak Japanese. Stringer is not an engineer, nor much of a gadget freak, nor even a marketing whiz; his main claim to fame is overseeing the resurgence of Sony's movie and music business.