‘Mr. Sony’ Pulls the Plug : Morita’s Resignation Said Unrelated to Movie Woes

Akio Morita, who built Sony Corp. into an international powerhouse and established himself as one of Japan’s most visible and controversial businessmen, resigned on Friday as the company’s chairman after nearly a year of ill health.

Morita, 73, co-founded Sony’s predecessor company in 1946. Over the next four decades, he and his firm did much to define the contemporary consumer electronics business, perfecting products such as the transistor radio and the color television set and inventing entirely new markets with innovations such as the videocassette recorder and the Walkman.

Along the way, Morita established himself as the maverick of Japan’s corporate elite, cultivating a global image for Sony long before that was fashionable and garnering publicity with outspoken commentary on trade issues and U.S.-Japan relations. He also presided over Sony’s foray into Hollywood, which may prove to be the biggest blemish on an otherwise stellar record.

Morita was sidelined by a stroke late last year, and since then has undergone a slow and difficult partial recovery. He had handed over day-to-day operations of Sony to Norio Ohga, his long-time No. 2, in 1989.

“During the period of his recuperation, Mr. Morita has from time to time expressed his wish to resign as chairman,” Sony spokesman Andrew House said Friday. “He put in a formal tender of resignation on Nov. 16, and that was formally accepted at the board of directors meeting today.”

Company officials insisted that the timing of Morita’s resignation was unrelated to Sony’s mid-November announcement that it was taking a staggering $2.7-billion write-off on Sony Pictures Entertainment, on top of a $510-million operating loss on the Culver City-based studio.

“I expect there will be that kind of interpretation, but it has nothing to do with this,” Managing Director Nobuyuki Idei told a news conference. “It’s a completely different subject.”

Morita will now assume the title of “founder and honorary chairman,” Sony said. The company left the post of chairman vacant Friday “and there are no further management changes planned at this point,” House said.

The write-off on Sony Pictures Entertainment amounted to an admission that Sony’s multibillion-dollar Hollywood adventure has thus far been a disaster. And though Morita has largely avoided direct association with the debacle, his belief in the advantages of having electronics “hardware” and entertainment “software” under one roof was a key factor in Sony’s fateful decision to buy Columbia Pictures in 1989 for $3.4 billion.

Morita’s departure could increase the pressure on both Ohga and Michael P. Schulhof, a Morita protege who oversees Sony’s U.S. operations and has direct responsibility for the entertainment operations. Sony insists publicly that it will stay the course in the film business, but some analysts say they would not be surprised if the company were seeking a way out.

Sony Pictures, the parent of Columbia Pictures and TriStar Pictures, has been hit hard by spectacular flops such as “Last Action Hero” and a series of embarrassing and expensive executive changes. And little has come of the much-touted “synergies” between electronics and entertainment--only Sony Music, a record company, has consistently performed well.

Morita was hospitalized from the time of his stroke until May and has mostly been at home since then, House said. “He has recovered a great deal of his power of speech and he is able to understand people without any problem at all,” he said. However, Morita is partially paralyzed on his left side and is using a wheelchair, he added.

Morita has long been an outspoken critic of various business practices both of U.S. and Japanese firms. His 1986 autobiography “Made in Japan” criticized what he called short-sighted American business practices. In more recent years he has also criticized some aspects of Japanese management. He has argued, for example, that in Japan employees’ salaries should be raised and stockholders should receive higher dividends. Many of his criticisms have been made in a spirit of trying to promote improved U.S.-Japan ties by revising practices that cause problems in the relationship.

Morita’s internationalist views were reflected in Sony’s 1961 decision to become the first Japanese company listed on the New York Stock Exchange. Over the years, American and other foreign investors responded with enthusiasm. Foreign ownership twice rose to a peak level of 47%, once in 1973 and again in 1981. Currently, 29% of Sony stock is foreign-owned, according to company statistics.

Morita Resigns as Sony Chairman

Sony co-founder and Chairman Akio Morita resigned Friday after nearly a year of ill health, ending an era for the pioneering consumer electronics and entertainment company. Some career highlights of the internationally known businessman: * 1946: Morita, an heir to a sake-brewing business, pools $500 with partner Masaru Ibuka to establish a small engineering company that later changes its name to Sony. Their first headquarters was located in the remains of a bombed-out Tokyo department store. * 1955: Leads Sony’s purchase of rights to the transistor, which helped facilitate the company’s design of a radio small enough to fit inside a pocket, thus creating a mass-market for transistor radios. * 1961: Trying to globalize Sony, Morita has its shares listed on the New York Stock Exchange--the first Japanese company to do so. * 1968: Helps launch a 50-50 joint venture with CBS Inc. in Japan, a deal that influenced Sony’s eventual purchase of CBS Records. Spearheads Sony’s development of a new type of television picture tube called the Trinitron which offered much-improved picture quality. * 1972: Oversees expansion of Sony plants into the United States by ordering that a color TV assembly plant be opened in San Diego. * 1975: Leads Sony’s introduction of the ill-fated Betamax videocassette player, making the company the first to offer home video recorders. Morita is said to have stubbornly stuck to the Betamax system long after JVC’s competing VHS system had captured the U.S. market. * 1979: Receives credit for the introduction of the Sony Walkman, a hand-sized headphone stereo cassette player, which becomes a startling success. * 1982: Oversees the introduction of Sony’s first compact disk player. * 1988: Directs Sony’s $2-billion acquisition of CBS Records Group--now Sony Music Entertainment Inc. * 1989: Leads Sony’s $3.4-billion purchase of Columbia Pictures Entertainment--now Sony Pictures--in an attempt to gain access to movies, records and programming that would entice consumers to purchase Sony’s electronic equipment. Co-authors a controversial book, “The Japan That Can Say No,” which argued that Japan holds the technological balance of power in the world, and thus the United States, not Japan, must change its business practices. * 1993: Collapses in November while playing tennis at his home. Later diagnosed as having a brain hemorrhage, and gives up all business activities. * Nov. 25, 1994: Resigns as Sony chairman but will keep the title of honorary chairman.

SONY EARNINGS

Net income, in millions of dollars:

1994: $148.5

Notes: 1987 figure of $91 million included only five months of data. That year Sony changed its fiscal year. For years prior to 1987, fiscal years ended Oct. 31; after 1987, fiscal years end March 31. 1994 earnings include a one-time charge for post-retirement benefits. Figures are converted from yen to dollars at the exchange rate in effect at the end of each fiscal year.

SONY STOCK PRICE

Quarterly highs, except latest:

Friday: $51.75, up $1.25

Sources: TradeLine; company reports; wire reports. Researched by ADAM S. BAUMAN / Los Angeles Times