GOODBYE TO A PRODIGAL SON

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The good times ended with the arrival of Idei, who kept a tight watch on his American subordinate. Says Schulhof: "I have received many, many written memoranda in the past six months from Mr. Idei outlining his views of how I should do things. Stylistically, it was not something I was used to dealing with." Schulhof concluded that his mandate to meld entertainment and electronics was over. "He's truly a visionary," says a former Sony executive. "He bet the ship that profits would ultimately come from this concept, but it didn't work in the short term. Was he a good manager? No. He was totally unable to make it happen."

There was little sympathy for Schulhof in Hollywood, where fellow moguls delighted in the downfall of a rival who was widely regarded as an interloper. Schulhof, the buzz said, may have been in Hollywood, but he was never really of it. Schulhof added to Sony's Hollywood expenses with the corps of studio chieftains who came and went at TriStar and Columbia, often departing with golden handshakes. Guber reportedly left with $40 million and a $200 million agreement from Sony to back him in a new company, an arrangement that was said to have infuriated Idei. A Hollywood executive summed up the prevailing view of Columbia as a place filled with "huge, bloated hogs feeding at a trough." Schulhof, who could take home a severance package worth some $40 million, dismisses the porcine image. "There may have been some overspending," he concedes, "but it was not excessive. In the last two years, we made a very, very concerted effort at cost control. We've had three consecutive quarters with great results, and we should have a fourth." He insists that his ouster "was not about performance." His biggest failure, Schulhof says, was "not being able to work with Mr. Idei."

The shake-up inspired talk that Sony (1994-95 sales: $44.8 billion) might now follow the lead of fellow Japanese giant Matsushita, which sold control of MCA and its Universal Studios to Seagram last April for $5.7 billion. "The real significance of Schulhof's ouster is that it is the last nail in the coffin of synergy between hardware and software," says analyst Porter Bibb, who follows the entertainment industry for the firm Ladenburg, Thalmann. "You can count the days until the movie business is sold."

But while Sony may be at a crossroads, the company staunchly denies having plans to leave Hollywood. Idei has stressed the importance of both entertainment and electronics to the future of Sony. He hammered home the point again last week in a statement declaring that "there is a definite linkage of hardware and software. Our companies will work together to maximize our business opportunities. That's Sony's big advantage." To further buttress this notion, Idei said, the heads of Sony's U.S. film, music and electronics businesses will for the first time sit together on the executive committee that oversees the company's American operations.