Sony to Cut 10,000 Jobs

TOKYO (Reuters) – Struggling electronics and entertainment conglomerate Sony Corp. said on Thursday it would cut about 7 percent of its global work force, sell more than $1 billion in assets and post a loss this year.

With a restructuring plan that underwhelmed some analysts, Sony hopes to reverse its fading fortunes and catch up with rivals such as Matsushita Electric Industrial and Sharp Corp. in flat TVs and Apple Computer and its popular iPod player in the portable music industry.
 
The inventor of the Trinitron TV and Walkman cassette player said it would book 210 billion ($1.9 billion) yen in restructuring charges in the two business years through March 2007 as it closes plants and slashes 10,000 jobs.

“These are pretty moderate plans,” Mizuho Securities analyst Koichi Hariya said. “There could have been some investors who had expected more drastic measures from the new foreign CEO.”

Sony estimates the restructuring will produce cost savings of 200 billion yen by the end of the business year to March 2008, when it aims to achieve an annual group operating profit margin of 5 percent and over 8 trillion yen in revenues.

That will be similar to Matsushita’s 5 percent profit margin target for 2006/07, up from its forecast for 3.8 percent this financial year.

“Sony and its peers all face tremendous pressure in the marketplace, but we have a sense of urgency and we have a sense of purpose. We can and will compete vigorously,” Howard Stringer, Sony’s new chief executive, told a press conference.

To help boost efficiency, Sony said it has abolished the company system that Stringer said was preventing different business units from communicating freely, causing overlap in development and missed opportunities in the market.

The electronics group will be reorganized to place centralized decision-making over key business areas under Ryoji Chubachi, who became Sony’s new president and electronics CEO in a major overhaul of management in June.

“We are going to achieve our goals by breaking down the existing silo walls and eliminating the highly decentralized structure we’ve maintained in the past,” said Stringer, a former journalist.

The company said it now expected to post a group operating loss of 20 billion yen in the current business year to March due to an increase in restructuring charges. Sony’s previous estimate was for an operating profit of 30 billion yen.

You can read the full story at the Washington Post [here].

TOKYO (Reuters) – Struggling electronics and entertainment conglomerate Sony Corp. said on Thursday it would cut about 7 percent of its global work force, sell more than $1 billion in assets and post a loss this year.

With a restructuring plan that underwhelmed some analysts, Sony hopes to reverse its fading fortunes and catch up with rivals such as Matsushita Electric Industrial and Sharp Corp. in flat TVs and Apple Computer and its popular iPod player in the portable music industry.
 
The inventor of the Trinitron TV and Walkman cassette player said it would book 210 billion ($1.9 billion) yen in restructuring charges in the two business years through March 2007 as it closes plants and slashes 10,000 jobs.

“These are pretty moderate plans,” Mizuho Securities analyst Koichi Hariya said. “There could have been some investors who had expected more drastic measures from the new foreign CEO.”

Sony estimates the restructuring will produce cost savings of 200 billion yen by the end of the business year to March 2008, when it aims to achieve an annual group operating profit margin of 5 percent and over 8 trillion yen in revenues.

That will be similar to Matsushita’s 5 percent profit margin target for 2006/07, up from its forecast for 3.8 percent this financial year.

“Sony and its peers all face tremendous pressure in the marketplace, but we have a sense of urgency and we have a sense of purpose. We can and will compete vigorously,” Howard Stringer, Sony’s new chief executive, told a press conference.

To help boost efficiency, Sony said it has abolished the company system that Stringer said was preventing different business units from communicating freely, causing overlap in development and missed opportunities in the market.

The electronics group will be reorganized to place centralized decision-making over key business areas under Ryoji Chubachi, who became Sony’s new president and electronics CEO in a major overhaul of management in June.

“We are going to achieve our goals by breaking down the existing silo walls and eliminating the highly decentralized structure we’ve maintained in the past,” said Stringer, a former journalist.

The company said it now expected to post a group operating loss of 20 billion yen in the current business year to March due to an increase in restructuring charges. Sony’s previous estimate was for an operating profit of 30 billion yen.

You can read the full story at the Washington Post [here].