Tuesday 10 April 2012

Sony 'downsizes'


Sony reported to be cutting 10,000 jobs
Japan's Nikkei newspaper has claimed Sony is to reduce its global workforce by 6% after four years in the red


9 April, 2012

Japan's Sony is to cut 10,000 jobs, about 6% of its workforce, the Nikkei newspaper has reported, as new chief executive Kazuo Hirai looks to steer the electronics and entertainment company back to profit after four years in the red.

The job cuts would be the latest downsizing in Japan where companies from mobile phone maker NEC to electronics firm Panasonic are trimming costs in the face of a strong yen and competition from rivals such as Apple and South Korea's Samsung Electronics.

TV makers in particular have been hit hard by the tough business climate as well as sharp price falls, with Sony, Panasonic and Sharp expecting to have lost a combined $17bn in the fiscal year just ended.

Investors will closely monitor a briefing on Thursday by Hirai, who formally took over this month as chief executive from Howard Stringer, for further clues on how Sony plans to revamp its business.

"Under a new CEO, it's easier to cut jobs or go in a new direction," said Yuuki Sakurai, head of fund manager Fukoku Capital, which holds a small stake in Sony.

"One of the things I'd like to see is that they shift their resources to other areas outside TVs … If they stick to TVs, they may have to fight a war they may not be able to win."

The Nikkei said half of the latest round of job cuts would come from consolidating the firm's chemicals and small and midsize LCD operations.

Sony said last month it was selling a chemical products division, accounting for some 3,000 people, while on 1 April it merged its Sony Mobile display unit, which had about 2,000 workers, with the small LCD panel businesses of Toshiba and Hitachi into a new firm called Japan Display.

The Nikkei said it was not clear how many of the cuts would take place in Japan or overseas.

As of the end of March 2011, Sony had 168,200 employees, according to the company's website.

Sony may also ask its seven executive directors who served through to the end of March, including Stringer, who is now chairman, to return their bonuses, the Nikkei said.

Sony, which announced 16,000 job cuts in December 2008 after the global financial crisis battered demand for its products, declined to comment on the report. The company has forecast a ¥220bn (£1.7bn) net loss for the year just ended, hurt in large part by its ailing TV business.

Sony said last month that Hirai would keep direct charge of the TV business as part of a structural reorganisation.

Sony shares closed up 0.6%, while the benchmark Nikkei average ended 1.5% lower. The stock has dropped more than 10% in the past three weeks since hitting a seven-month high


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