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Global General

Sony faces jittery shareholders after cyberattack

(Agencies)
Updated: 2011-06-28 18:49
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TOKYO - Sony Corp. Chief Executive Howard Stringer credited "very loyal" PlayStation Network gamers for flocking back to the service in big numbers, as he sought Tuesday to reassure shareholders following a series of embarrassing hacker attacks.

Sony faces jittery shareholders after cyberattack

Pedestrians are reflected on a Sony signage in Tokyo June 28, 2011. [Photo/Agencies]

Stringer apologized for the data breach in April, which compromised personal data from more than 100 million online gaming and entertainment accounts. Sony was subsequently criticized for lax security and acting too slowly to inform customers as it grappled with one of the largest-ever security thefts.

Stringer said at an annual shareholders meeting held at a Tokyo hotel that as many as 90 percent of subscribers have come back since the Japanese company began restoring service last month.

"Our brand perception, you'll be happy to know, is clearly improving again," he told a less-than-happy crowd.

Executives faced harsh questioning from individual shareholders, who expressed frustration and anger over the hack. One man even asked for Stringer to step down. Though his suggestion generated scattered applause, it ultimately went nowhere.

Sony's stock price has fallen 30 percent this year, compared with a roughly 6 percent decline in the benchmark Nikkei 225 stock average.

The Tokyo-based company estimates the hacks will cost 14 billion yen ($173 million) in increased customer support costs, freebie packages to welcome back customers, legal fees, lower sales and measures to strengthen security.

Stringer said he believes Sony was attacked because it tried to protect its intellectual property, lending credence to widespread speculation that the moves were meant to punish the company for suing hackers like George Hotz. Known as "Geohot," Hotz broke into the PlayStation 3 operating system and posted the steps online.

"These are our corporate assets, and there are those who don't want us to protect them," Stringer said.

Executives reiterated that the attacks have not derailed Sony's core strategy of more deeply connecting its hardware, content and services.

"My foremost responsibility to the board and all of you is to further advance the transformation process, firmly establish Sony's position as a global product, content and service leader in the networked digital era and ensure our continued development and growth," Stringer said.

Sony is forecasting a return to profit for this fiscal year after logging three straight years of red ink. Along with the data breaches, the company has been battling production delays and sales losses after supplier factories were damaged by the March 11 earthquake and tsunami.

It expects an 80 billion yen ($989 million) profit for the current fiscal year.

In a statement later Tuesday, Sony released executive compensation figures for the last fiscal year through March 31. Stringer received 345 million yen ($4.3 million), along with stock options worth 518 million yen.

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