When Sony released its third-quarter earnings Jan. 31, investors had plenty to be ecstatic about. Analysts had been predicting that Sony Chief Finance Officer Nobuyuki Oneda would declare the yearend holidays as the company’s most profitable quarter ever, and Oneda didn’t disappoint. October-to-December revenues and net profit were record highs, he told journalists in Tokyo.
The period highlighted, once again, how far Sony has come since Chairman and CEO Howard Stringer took over in mid-2005. Back then, Stringer and Co. laid out specific profit targets and promised to snip away at units that weren’t vital to the company’s consumer-electronics and digital entertainment businesses.
Time for New Goals
Most analysts think Sony will meet nearly every target on time. The one Sony says it may not reach: an operating profit margin of 5 percent. That’s unlikely after its downward revision of its full-year operating profit forecast to $3.85 billion, 9 percent lower than its previous prediction of $4.2 billion. It blamed the yen’s rise and stock market’s swoon over the U.S. subprime mortgage mess.
But the revision wasn’t entirely unexpected, and many analysts feel Stringer and Co. now need to consider setting the bar higher. The question is, what should Stringer’s new goals be? BusinessWeek asked financial and tech-sector analysts to jot down a few things they want Stringer’s management team to accomplish over the next three years. Some common themes: innovate like Apple, manage the financial books like Matsushita Electric Industrial [soon to be renamed Panasonic], and make the gaming business profitable as fast as possible. Here’s a more detailed look at what analysts want to see from Sony.
Boost return on equity. Sony should aim for a return on equity of between 10 percent and 15 percent, says Kota Ezawa, of NikkoCitigroup. ROE gauges how much profit a company is making with the money…