Sony-Olympus alliance aims for high-tech surgery

Oct 01, 2012 by Yuri Kageyama
Sony Corp. President and Chief Executive Officer Kazuo Hirai, left, and Olympus Corp. President Hiroyuki Sasa bow together at the end of a joint press conference on their business deal in Tokyo Monday, Oct. 1, 2012. Japan Sony's new alliance with scandal-tarnished Olympus will produce endoscopes and other surgical tools packed with the Japanese electronics and entertainment maker's three-dimensional imagery and super-clear display technology called 4K. (AP Photo/Koji Sasahara)

(AP)—Sony's new alliance with scandal-tarnished Olympus will focus on producing endoscopes and other surgical tools packed with the Japanese electronic maker's three-dimensional imaging and super-clear "4K" display technologies.

Sony Corp. President Kazuo Hirai said it's not clear when the alliance's first products will become available. He acknowledged that medical equipment requires special regulatory approval that will take longer and be a learning curve for Sony whose expertise is in gadgets and movies.

"This is a challenge in a new sector," Hirai told reporters at the Tokyo Chamber of Commerce in a joint press conference with Olympus Corp. President Hiroyuki Sasa. "There was a lot of talk on whether we could go at it alone."

But Sony decided it couldn't and felt that risks could be lowered if the two Japanese companies joined forces in the effort to turn medical equipment into one of the pillars of Sony's sprawling business, Hirai said.

Sony's empire includes consumer electronics, movies, music, games and banking. The company's sheer size and its apparent inability to produce long promised "synergies" among its divisions have often been criticized.

Technology such as 3D and the futuristic displays known as 4K have not yet produced big results in consumer electronics products such as TVs. TV sets with 3D images require viewers to wear special glasses and haven't caught on. Sony has shown a 4K TV image, which is more fine and dazzling than high-definition TV, but it is unclear whether such an expensive product will catch on.

Sony Corp. President and Chief Executive Officer Kazuo Hirai, left, shakes hands with President of Olympus Corp. Hiroyuki Sasa, during a press conference in Tokyo, Monday, Oct. 1, 2012. Sony's new alliance with scandal-tarnished Olympus will produce endoscopes and other surgical tools packed with the Japanese electronics and entertainment maker's three-dimensional imagery and super-clear display technology called 4K. (AP Photo/Koji Sasahara)

The alliance, announced Friday, calls for Sony to invest 50 billion yen ($640 million) to become the top shareholder in Olympus, with an 11 percent stake.

Olympus needs to shore up its finances after covering up massive losses dating back to the 1990s. The scandal surfaced only after its British chief executive Michael Woodford turned whistleblower and raised questions about dubious investments. Woodford was later fired.

Hirai said Sony is aiming to control more than 20 percent of the medical-equipment-for-surgery market by 2020, when the sector is expected to grow to 330 billion yen ($4 billion).

The companies are planning also to cooperate in the digital camera area, where they have been rivals. Sasa said cost savings would be likely by sharing parts.

Of Sony's 50 billion yen ($640 million) investment, about half will go into developing endoscopes equipped with 3D and 4K technology, Sasa said.

Olympus is the world's biggest maker of endoscopes, which are special devices that enter the body to look inside organs and can be used to carry out surgery. Olympus is also known for its cameras.

Sony Corp. President and Chief Executive Officer Kazuo Hirai, second left, and Olympus Corp. President Hiroyuki Sasa, second right, attend a joint press conference on their business deal in Tokyo Monday, Oct. 1, 2012. Japan Sony's new alliance with scandal-tarnished Olympus will produce endoscopes and other surgical tools packed with the Japanese electronics and entertainment maker's three-dimensional imagery and super-clear display technology called 4K. (AP Photo/Koji Sasahara)

Sony needs a turnaround after reporting losses for four straight years as it fell behind in portable music players, flat-panel TVs and smartphones. Sony's red ink for the latest fiscal year through March was the worst in its 66-year history.

A report Friday by Barclays in Tokyo said the deal was a big plus for Olympus but not much of a boost for Sony, although it said that using Sony's sensor and digital image technology in the medical sector held great promise.

Sony stock inched down 0.2 percent on Monday. Olympus gained 1.3 percent.

Olympus and its three former executives pleaded guilty in a Tokyo court last week on charges of falsifying financial reports, involving elaborate schemes using overseas bank accounts, paper companies and transactions controlled behind-the-scenes—all to keep massive losses off company books.

Explore further: Alibaba IPO comes with unusual structure

not rated yet
add to favorites email to friend print save as pdf

Related Stories

Olympus whistleblower wins millions in settlement

Jun 08, 2012

(AP) — Former Olympus Corp. Chief Executive Michael Woodford will receive 10 million pounds ($1.2 billion yen, $15.4 million) in a settlement over his dismissal from the Japanese camera and medical equipment maker. Olympus ...

New Sony president gets shareholder approval

Jun 27, 2012

(AP) — Kazuo Hirai, the former head of Sony's game division, won shareholder approval Wednesday to steer a turnaround at the struggling Japanese electronics giant as its new president and chief executive.

Sony to cut 10,000 jobs, turn around TV business

Apr 12, 2012

(AP) -- Faced with mounting losses, Sony Corp. said Thursday it will slash 10,000 jobs, or about 6 percent of its global workforce, and try to turn around its money-losing TV business over the next two years.

Japan's Fujifilm seeks tie-up with Olympus

Jan 30, 2012

Japanese film and camera maker Fujifilm has offered scandal-hit Olympus a capital and business tie-up, it said Monday as it announced a slump in third-quarter profits.

Sony's Hirai to replace Stringer as CEO in April

Feb 01, 2012

(AP) -- Sony Corp. announced Wednesday that Kazuo Hirai, who leads the company's core consumer products business, will replace Howard Stringer as CEO and president effective April 1, as the electronics and ...

Recommended for you

Job listing service ZipRecruiter raises $63 million

14 hours ago

ZipRecruiter, a California start-up that tries to simplify tasks for recruiters, has raised $63 million in initial venture capital funding as the 4-year-old service races to keep up with growing demand.

Alibaba IPO comes with unusual structure

23 hours ago

Foreigners who want to buy Alibaba Group shares in the Chinese e-commerce giant's U.S. public offering will need to get comfortable with an unusual business structure.

User comments : 0