Sony to Cut 10,000 Jobs in Restructuring

Sep 22, 2005  •  Post A Comment

Sony Corp., facing a loss of about $90 million in the current fiscal year, announced a major restructuring that will cut 10,000 jobs by March 2008, result in the closing of 11 of its 65 factories and impact 15 unprofitable divisions through downsizing, alliances or a sale.

The changes were revealed during a press conference Thursday in Tokyo by CEO Howard Stringer, who took over in March, and President Ryoji Chubachi. Mr. Stringer is the first foreigner to head Sony.

The primary impact will be on the faltering electronics business, which has lost money for two straight years. Plunging prices for electronics and the failure to capitalize on the growth of flat-screen TVs and portable audio electronics have caused a drop in earnings. “We have made promises before but we failed to execute them,” Mr. Stringer said at the press conference. “We must fight like the Sony warriors that we are.”

Mr. Chubachi said the company will focus on what he called “champion products” such as PlayStation 3, Bravia liquid crystal display televisions and the Walkman portable music players.

“For our growth strategy in electronics, resources will be focused on [high-definition] products, mobile products and the semiconductors/key component devices that can further differentiate Sony’s products from the competition,” the company said in a press release. “A division to promote the development of cell processor-related technology, products and applications will be created, reporting directly to Sony’s CEO.”

The cell technology is part of an effort to expand products for a broadband world. “We are moving into an era where music, video and games can be distributed on the network and enjoyed on mobile devices,” the press release stated. “In this environment, Sony will work to regain its position of leadership in portable audio and establish a strong position in the rapidly developing portable video market. Our goal is to develop products and services that enable consumers to enjoy entertainment content ‘on the go.'”

There will be an emphasis on development of high-definition technology and products, which will draw on the Sony film and TV library, and the MGM library, for which Sony recently acquired rights. “The advent of new media like UMD and Blu-ray disc will provide many platforms to leverage SPE’s digital content assets,” said the release, “and strengthen linkages with other businesses in the Sony Group.”

Sony said 4,000 jobs will be eliminated in Japan and 6,000 elsewhere in the world. Sony did not specify where those cuts would be felt. The cuts are not expected to have a significant impact on Sony’s U.S. entertainment operations.