Sony plans to trim 20,000 jobs globally over three years
Tuesday, October 28th 2003, 12:00 am
By: News On 6
TOKYO (AP) _ Sony Corp. is trimming 20,000 jobs, or about 13 percent of its global work force, in the next three years as part of a turnaround strategy announced Tuesday to better integrate its entertainment, video-game and electronics businesses.
Of those job cuts, 7,000 will be in Japan, but the Tokyo-based electronics and entertainment giant did not give further regional breakdowns or other details. Sony employs about 154,500 people worldwide.
Sony said it will integrate administrative and corporate jobs that overlap and increase efficiency, such as relocate U.S. electronics and marketing operations divided between the West and East Coasts mainly to the West Coast. In Europe, it will bring together consumer electronics marketing groups to a new location in Great Britain, it said.
The plan includes bringing together engineers in the company's home and mobile electronics sectors, such as cell phones, TVs and video-game consoles, to beef up development of computer chips and devices, Sony said.
Speaking to reporters at a Tokyo hotel, Sony officials said they were presenting a two-stage plan to cut costs and get growth going.
``It may appear as though Sony is being sucked into a black hole,'' Sony Executive Deputy President Ken Kutaragi said, showing a slide that had a black dot in the middle of a sky with images depicting Sony's electronics, game and entertainment sectors. ``But we hope to create a 'Big Bang' that will lead to new business.''
Credit Lyonnais Securities analyst Kun Soo Lee said the plan showed Sony's commitment to slim down. The number of job cuts in Japan was ``surprisingly bigger'' than expected, he told Dow Jones Newswires.
Sony said it will set up a $2 billion joint venture with Samsung Electronics Co. of South Korea to develop future liquid crystal display panels. The preliminary agreement will be finalized by early next year, the companies said.
Kutaragi said Sony will focus on key products such as flat TVs, DVD recorders, home servers and the PSX, the gadget Sony is billing as a crossover between audiovisual equipment and the PlayStation 2 video-game console.
As part of cost cuts that will save the company $2.8 billion a year, Sony will trim production, distribution and service facilities by about 30 percent and stop making in Japan cathode ray tubes for TVs by the end of this year, said Sony President Kunitake Ando.
By April next year, a holding company will be set up for Sony's three financial businesses, Sony Life Insurance Co., Sony Assurance and Sony Bank, Sony Chief Executive Nobuyuki Idei said.
Sony has been reviewing its strategy to boost lagging profits.
The emergence of cheaper rivals such as Samsung of South Korea and Dell Inc. of the United States have chipped away at Sony's profits. Sony's image built over the decades through hits like the Walkman has lost some of its shine lately as trends in electronic goods come and go far more quickly.
Sony has even fallen behind domestic rivals such as Sharp Corp. in liquid crystal display TVs, which are growing in popularity around the world, as well as Matsushita Electric Industrial Co., which makes the Panasonic brand, in DVD recorders.
Sony's profits tumbled 25 percent in the quarter from July through September to $304 million compared to a year ago. Sales edged up 0.4 percent to $17 billion _ the first sales increase for the Tokyo-based company in three quarters.
Sony said extra research costs in its video game division and losses from movie box office flops offset strong sales of digital cameras and cell phones in that quarter.
On Monday, Sony announced a joint venture with Japan's top mobile carrier, NTT DoCoMo, to develop an integrated computer chip based on Sony's ``smart card'' technology that will allow cell phones to be used as train passes, electronic wallets and personal identification.
Officials say that venture being set up in January is not expected to generate profits for the first few years, but Sony said Tuesday it was considering other alliances to boost profits.
Idei stressed that Sony had one edge in having entertainment under its wing. Besides electronics, Sony also has movie, music and video-game divisions. The arrival of the network home makes that combination potentially powerful because people will be using gadgets to download music and films, he said.
But symbolic of Sony's plight was a question from a reporter about whether Idei was thinking about stepping down to take responsibility for the recent poor showing. Idei said he wasn't quitting.
``Our results show recovery,'' Idei said and then broke into a grin. ``I don't understand your question.''