Losing Faith.(analysts blame Sony's CEO for low profit margins)

A Sony watcher recalls the moment he lost faith. It happened more than a year ago, at a Tokyo gathering for analysts and portfolio managers called to present the company's latest performance numbers. Atypically for such an occasion, Sony opened with a flashy montage of movie and music "content" that reflected CEO Nobuyuki Idei's high regard for his company's films and pop acts. The audience was unmoved. How, someone wondered, had virtual no-name Funai Electric attained a profit margin five times higher than Sony's? Idei dodged the question by blurting that it was "rude." "That triggered me to put a question mark on top management," says the analyst.

Things have only gotten worse for Idei. On Oct. 28 Sony announced midterm earnings showing a paltry 1.5 percent profit margin--its worst in recent memory. Experts are now questioning more than Idei's leadership. The cumulative effects of delays with new products and intense competition from South Korea constitute "the biggest crisis of [Sony's] 57-year history," warned the magazine Nikkei Business.

Analysts blame Idei for Sony's downfall. They say he has promoted yes men, ignored criticism, delayed technical innovations and kept obsolete assembly lines running too long. As one investment-fund researcher in Tokyo sees it: "He doesn't understand the business he's in." Once revered for visionary thinking, Sony's boss is "a philosopher" who has lost touch with reality, says ...