Sony's new mobile chief has hands full as handsets struggle

Sony’s new mobile chief has a tough job ahead of him—convincing people to buy Xperia smartphones.

Hiroki Totoki will be in charge of a business that hasn’t yet had a winning product, and which is expected to post an operating loss of ¥204 billion ($1.8 billion) for the year to March 31, 2015, according to an earnings report Sony released on Friday.

Totoki, a 50-year-old senior vice president currently in charge of corporate planning in the Finance and New Business Creation Department, will be trying to generate interest in Xperia handsets as he replaces Kunimasa Suzuki as the head of Sony Mobile Communications. Totoki previously worked at Sony Bank and Sony’s Internet service provider So-net.

When he takes the reins Nov. 16, Totoki will face daunting competition from heavy-hitters such as Apple, which has a nearly 60 percent share of Japan’s smartphone market, according to MM Research Institute.

“What I have to do is to strengthen the revenue base of the mobile business—that’s what I’m focused on,” Totoki told an earnings conference on Friday in Tokyo.

“Since the entire industry is moving at a fast speed, I will strengthen and accelerate our management speed. I’ll give details on our IR Day,” he added, referring to a Nov. 25 investor relations event.

Meanwhile, Sony said its Mobile Communications Segment will post slightly lower sales in the year to March 31, 2015 compared to its July forecast. Some of that drop is expected to come from falling sales in China, a big market for smartphones.

Mobile sales for the July-September quarter were almost flat compared to a year earlier, and came with an operating loss of ¥172 billion as a result of an impairment charge of goodwill that Sony recorded for the unit in September.

The company had slashed its assessment of the fair value for the business after reconsidering its 2012 buyout of Ericsson’s share in their Sony Ericsson mobile phone joint venture, which gave Sony phones an international presence.

“If we were to exclude the goodwill impairment, a ¥4 billion operating income would have been recorded,” Sony’s Chief Financial Officer Kenichiro Yoshida said at the conference, trying to cast the latest results in a better light.

Sony CEO Kazuo Hirai has given Totoki the task of reforming Sony Mobile, “with the goal of strengthening our relationship with mobile carriers around the world and enhancing the appeal of our products in order to stabilize and improve profitability of this business,” Yoshida added.