By Makiko Yamazaki
TOKYO (Reuters) - Japan's Sony Corp said CEO Kazuo Hirai would be handing over the reins to finance chief Kenichiro Yoshida, while at the same time forecast a record annual profit that highlights the revival in fortune that they have both engineered.
Once a market leader in consumer-electronics, the maker of the Walkman and Trinitron TV in recent years fell behind the likes of Apple in innovation and the more nimble Asian rivals in price competition. It was the Hirai-Yoshida duo that helped Sony streamline its unprofitable electronics businesses and capitalize on the spread of smartphones with image sensors.
People familiar with Yoshida describe him as a reserved foil to the more flamboyant "Kaz" Hirai, but also a forceful partner who pushed through many controversial changes, including the sale of the Vaio PC division and spinning off the TV business, to swerve the company away from losses.
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As a vindication of these measures, Sony quadrupled its profits in the three months ended December, its best-ever third quarter on record, on robust demand for image sensors as smartphone makers increasingly adopt dual-lens rear cameras.
The company is also on track for the strongest annual showing in its 72-year history - with its latest estimate for operating profit being 720 billion yen for the year through March, versus a prior forecast of 630 billion yen that would have also been a record high.
Yoshida's next challenge would be to make sure Sony keeps up this momentum even after the impact of restructuring and demand for image sensors wear off, analysts said.
"The part where he's still not tested, and we really have to see, is whether or not he can inspire the creative aspect of Sony," said Macquarie's Damian Thong.
"There's a need to inspire a new generation of engineers who are meant to take Sony technology and Sony know-how to create breakthrough products in new markets, and this is the crucial test that he faces," Thong added.
Known for imposing discipline and getting the job done, Yoshida had rattled some parts of the company, including its Hollywood studio business, with his no-nonsense approach to restructuring after he became CFO in 2014.
Leaked emails from a hack at Sony Pictures show the then CEO of Sony Entertainment, Michael Lynton, confiding to studio co-chair Amy Pascal that he was under "enormous pressure" after Yoshida sought a review of executives' pay.
Yoshida will be taking on the top job at Sony on April 1, replacing Hirai who has been CEO since 2012. Hirai will stay on at the firm as chairman.
"I would like to take over the management foundation that was built under Hirai's leadership, and to improve Sony's competitiveness as a global company," Yoshida said.
The prospect of a record full-year profit, first announced three months ago, drove up Sony shares to their highest in a decade in January. The stock rose as much as 2 percent on Friday after Sony's surprise news about a CEO change, versus the broader market that was down about a percent.
(Reporting by Makiko Yamazaki and Minami Funakoshi; Writing by Ritsuko Ando; Editing by Himani Sarkar and Edwina Gibbs)