Sony is restructuring, to cut 10,000 jobs, sell off $1 billion in assets |
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Fri, 23 Sep 2005 00:35
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TOKYO: Japanese entertainment electronics behemoth Sony Corporation is slashing its global work force by about 7 percent -- 10,000 jobs approximately -- as part of a restructuring plan to reverse its sliding fortunes and to take on rivals who are gaining comfortable marchovers in various segments of business. The company also announced plans to divest assets worth $1 billion and perhaps post a loss this fiscal.
It disclosed that it will book some 210 billion yen in restructuring charges in the next two fiscal years and close down plants in several places. These measures could bring in cost savings of more than 200 billion yen by end-2008, when it expects to have an annual group operating profit margin of 5 per cent and revenue of 8 trillion yen.
In a major policy shift, the company said there will now be centralised decision-making under president Ryoki Chubachi.
Sony is expecting to incur a group operating loss of 20 billion yen in the current fiscal ending March, mainly as a result of the restructuring charges. It had earlier projected an operating profit of 30 billion yen.
Elaborating on the plan, the company said it will sell off real estate, stocks and several non-core assets worth 120 billion yen by 2007/08. There will also be revamp of its product models and 11 global factories out of 65 will be closed down. Several production lines (essentially making cathode ray tube sets) of the loss-making TV unit will be deactivated, while the focus will be on increased production of LCD and rear-projection TVs. It will invest 340 billion yen on semiconductors over two business years ending March 2008.
A restructuring is already under way at the company, which saw loss of some 20,000 jobs and substantial lowering of fixed costs. The plan, which analysts described as not effective, is to end in the current fiscal.
Sony's chief executive Howard Stringer said the proposed reductions will eliminate a "significant redundancy" in operations. The company will now focus on specific product categories such as TV, video recorders, Walkman and digital imaging. There will be an increased emphasis on LCD and shelving of plasma technology.
The jobs cuts will be 4,000 in Japan and 6,000 overseas.
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