Sony plans to cut 10,000 jobs to save costs

Sony issued an earnings warning Thursday, and said it will cut 10,000 jobs and a number of product models in an effort to reduce costs.

Sony issued an earnings warning Thursday, and said it will cut 10,000 jobs and a number of product models over the next few years, as it reorganizes its electronics division in an effort to reduce costs.

The company now forecasts a net loss of YEN 10 billion (AU$117 million) for the fiscal year to March 31, compared to previous forecasts of a YEN 10 billion net profit for the same period. Restructuring charges associated with the planned job cuts and reorganization are responsible for this expected reversal of fortunes, the company said. The company still forecasts revenue of YEN 7.25 trillion, unchanged from the forecasts it issued in July.

Sony aims to cut costs by YEN 200 billion by the end of its 2007 fiscal year by shedding or downsizing 15 unprofitable businesses, cutting 20 percent of its product models, and reducing the number of manufacturing sites from 65 to 54. These changes will result in 10,000 job losses, half of them headquarters and administrative staff, the company said. The company will cut 4,000 of the jobs in Japan, it said.

In reorganizing its electronics business, Sony is betting heavily on Cell, a microprocessor jointly designed with IBM and Toshiba that it expects to use in future video game consoles. Sony's chief executive officer will directly oversee the division which promotes and develops the processor and related products and technologies.

A similar product-specific focus will be extended to the whole of the electronics division, with the abolition of the existing structure of "network companies" and the creation of clear business groups for specific product categories, Sony said.

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Peter Sayer

IDG News Service
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