Sony: End of an Era As Morita Bows Out

TOKYO -- Sony Corporation announced Friday that its legendary chairman, Akio Morita, was stepping down nearly a year after a stroke laid him low.


As the company's president from 1971 to 1989, Morita was a driving force behind its innovative products ranging from the first tape recorder to the Walkman.


After the Walkman and pioneering work on video and compact disc technology, he led Sony into the software business, buying CBS Records in 1988 and Columbia Pictures of Hollywood in 1989.


The feisty Morita had disappeared from public view after he was struck by a cerebral hemorrhage on Nov. 30 last year, confining him to a wheelchair and making him incapable of carrying out his duties.


Sony's board accepted his resignation Friday morning, after the 73-year-old chairman asked to stand down Wednesday last week -- one day before Sony announced a 265.2 billion yen ($2.67 billion) write-off of goodwill linked with its 1989 purchase of Columbia Pictures.


Analysts said the timing of Morita's decision to quit could have been linked to the write-off. This had helped plunge the group's half-year pretax profit of 279.96 billion yen into the red.


It also confirmed what many said when Sony bought Columbia -- that at $3.4 billion, it had paid way over the odds to get into Hollywood, in a vague hope that a magical "synergy" between electronic hardware and movies would make the movie company far more valuable than it appeared.


Hurt by the write-off, Sony's shares fell for four trading days in a row on the Tokyo Stock Exchange. They lost 13.4 percent of their value until Thursday but then rose on Friday on a technical correction to end 130 yen up at 5,160.


Sony executives were quick to deny any connection between the two events on Friday, saying Morita's decision was prompted by concern about how the company would appear overseas, with a chairman unable to perform his duties for so long.


It had nothing to do with the financial news, Managing Director Nobuyuki Idei told a news conference.


"I expect there will be that kind of interpretation, but it has nothing to do with this," he said. "It's a completely different subject."


The position of chairman -- traditionally more of a ceremonial post in Japan than in America and Europe -- will be left unoccupied, while Morita will support President Norio Ohga as the "founder and honorary chairman."


Morita is one of Japan's best-known and outspoken businessmen, feared in business circles for his sharp tongue.


He used this in the 1980s to berate managers in America and Europe for their obsession with short-term profits, and in the 1990s to chide those in his own country for their rigidity and unwillingness to open up to the outside world.


But the public will remember him more for his role in giving birth to the Walkman portable stereo, and bringing a host of other electronics products -- from the first Japanese tape recorder to the compact disc -- within the grasp of ordinary consumers.


His flamboyant career ground to an abrupt halt when he suffered a cerebral hemorrhage that required surgery and left him nearly paralyzed on his left side.


His departure comes after nearly a year of taking no part in Sony's business, and so is unlikely to have any immediate effect on the company's operations.


But analysts said the decision to leave the chairman's post vacant might indicate rumbles at the top concerning the recent massive write-off -- it was president Ohga who masterminded the Columbia purchase.


"Ohga still seems pretty much in control but maybe the feeling is that things have gone so badly that he's about to lose day-to-day control," said Barry Dargan of S.G. Warburg's Tokyo office.