Sony to cut 10,000 jobs, slash factories in restructuring drive
Thursday, September 22nd 2005, 8:39 am
By: News On 6
TOKYO (AP) _ Sony Corp. said Thursday it will cut 10,000 jobs globally, slash the number of factories and cut costs by $1.8 billion in an ambitious restructuring bid to revive its stumbling electronics business.
The Japanese company _ under new management since March _ said it expected a group net loss of $90 million in the current fiscal year. Plunging prices of consumer electronics and missteps with its portable music players and televisions have taken a hefty toll on earnings.
The changes, to be put in place by the end of fiscal 2007, would result in a 6 percent reduction of its global work force _ 4,000 workers in Japan and 6,000 elsewhere, while the number of factories would be cut from 65 to 54, officials said. The company did not say where it would cut jobs outside of Japan.
The turnaround plan comes under the fresh leadership of Howard Stringer, a British-American dual citizen who was named chief executive of the electronics and entertainment company in March _ the first foreigner to head Sony.
``We have made promises before but we failed to execute them,'' Stringer said at a news conference in Tokyo. ``We must fight like the Sony warriors that we are.''
Sony has lost money in its electronics sector for two straight fiscal years and has relied on its movie division such as the popular ``Spider-Man'' series and its successful PlayStation consoles in its computer video-game unit to maintain profits in recent years.
Known as a pioneer in electronics first with the transistor radio and then the Walkman portable music players, Sony has seen some of its glory dimmed by Asian rivals like Samsung Electronics Co. that are offering cheaper prices.
It has been criticized as falling behind in slimmer TV models, such as liquid-crystal and plasma display sets, that are increasing popular around the world, losing market share to relative Japanese newcomer Sharp Corp. as well as old-time rival Matsushita Electric Industrial Co., which makes Panasonic brand goods.
Sony also fell behind Apple Computer Inc.'s iPod in what should have been its forte _ portable music players. The iPod models are proving a big hit in Japan, where Apple began its iTunes store in August to rave reviews.
President Ryoji Chubachi, also head of the electronics division, conceded that his company wasn't making products that people wanted to buy and that Sony's technological prowess had declined. Sony said it would focus now on so-called ``champion products'' including the PlayStation 3, Bravia liquid crystal display televisions and the Walkman portable music players.
``There can be no revival for Sony without recovery in our TV business,'' Chubachi said. ``We are definitely feeling that the recovery is underway.''
Under the plan announced Thursday, the company said it would review real estate, stock holdings and other non-core assets and dispose of some $1.2 billion in assets by March 2008.
To cut costs, Sony said it would downsize or terminate 15 business categories, reduce the number of models by 20 percent compared to the current fiscal year, and reduce the number of factories by 11 to 54. Sony did not specify which businesses would be trimmed.
``These reductions will help streamline our operations and enable us to operate more efficiently,'' the company said in a statement.
Over the last five years, Sony shares have lost two-thirds of their value, and are currently trading at about $36.