A GOOD KNIGHT FOR SONY

Howard stringer was about to embark on a round of Oscar weekend partygoing when he got the call from Japan: Sony's chairman and CEO Nobuyuki Idei was stepping down and vice chairman Stringer, who is based in New York, was the pick as his successor. After checking with his wife, who lives with his two children in England, Stringer accepted. The 63-year-old Welsh-born former head of CBS News (who was knighted in 2000) is now the first gaijin to head the electronics flagship of the Japanese economy--albeit a troubled company that has lost 75 percent of its stock price during the last five years. Stringer, who doesn't speak Japanese, faces the challenge of directing a firm with assets in film and music, a mighty game division and a woefully underperforming electronics division. He spoke with NEWSWEEK's Steven Levy about his plans to restore the luster to one of the world's greatest brands.

LEVY: Why did Mr. Idei choose you as the first foreigner to lead Sony?

STRINGER: I think he liked the way I did it here in the United States. We did a lot of tough things. We laid off 9,000 people, did successful integration at Sony BMG [music] and did a lot of breaking down walls at Sony Electronics in this country. I think he thought that, in the end, there was an advantage to being an outsider. Sony is built up on a web of interpersonal relationships that go back to the dawn of history. The old boys never go away. But that also makes it very difficult for the insider who has to attack the problems of too much management, and turning that around.

How will you use that outsider status?

You have to do what's right; you can end up killing a company with kindness. There is a sense inside the company that some of the pride has been singed with concern about the direction of the company, and it's a very proud company. In a meeting I went to a few weeks before, I said, "The business of Sony has become management, not making products." Engineers are stars, like actors in Hollywood. Point them in the right direction, and let them go. But when push comes to shove, if we reach the conclusion that the only way to solve this problem is to do something tough, I'm happy to be the idiot foreigner, and I'm going to take charge of it.

Does that mean layoffs?

I'm not trying to scare an organization when I don't know what I'm talking about yet. But we certainly need to look at the size of the headquarters and the staff and so forth, and make the company responsive to the engineers. Make the engineers the stars and not management.

Part of the shake-up last week was the demotion of PlayStation creator Ken Kutaragi from the board. What's his future?

I have enormous regard for his brain. You don't want to spread that talent really thin. He is very important to the company.

Will you return him to the board?

I have it open. But either way, I don't want to give the impression that he isn't as valuable an executive as any company is ever likely to find.

The success of the iPod is a blow to Sony. Are you determined to prevent a similar lapse?

I still have to ride the balance between the demands of copyright and the demands of hardware. In the end, a hardware device is not worth anything without content. That said, I can't afford to be beaten this way again. It's become a symbol of Sony's stodginess or Sony's lack of innovation.

Are you worried that a weakened Sony might be a takeover target?

I don't think things are precarious at the moment. But [in 2007] the Japanese code makes hostile takeovers easier. If the thought of a hostile takeover a year or two from now is a goad, so much the better. Everybody has to understand that we have a shared responsibility to make sure none of these things happen, and that Sony is once again a cool company and innovative. And I don't think there's any particular obstacle to that.

Why take this on now?

You don't get these opportunities more than once in a lifetime. It's tough on my family; I have young children, and I fear that this will impact them. I've been going back over to England every other weekend, and I just simply go the long way: Friday to England and then on to Tokyo on the Sunday night, and I'll just be doing that. Thank God the CEO of Sony Electronics speaks good English and the CFO speaks good English, and we'll begin and end the day with conversations. You have to have the right people in place, and the right people supporting you. And if you don't you have to make changes.