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Sony to cut 16,000 jobs in total

Latest update : 2008-12-10

Struggling Japanese electronics giant Sony has announced it will slash 16,000 jobs in total, with 8,000 cuts in temporary jobs adding to the 8,000 permanent job cuts announced on Tuesday. But investors doubt that the plan goes far enough.

AFP - Investors reacted coolly Wednesday to Sony Corp's plans to slash about 16,000 jobs and shut plants to cope with the financial crisis, as analysts warned the revamp may not be radical enough.
  
Sony shares ended up 1.1 percent at 1,917 yen, lagging behind the benchmark Nikkei index which rose 3.2 percent, a day after the electronics icon unveiled plans to cut 8,000 permanent jobs and the same number of temporary posts.
  
"We think further reforms are essential," Goldman Sachs analyst Yuji Fujimori said.
  
"We believe these measures are insufficient to change the business model. Sony has been discounting products recently, presumably in an attempt to reduce LCD TV and digital camera inventory."
  
Sony aims to save 1.1 billion dollars a year from the overhaul, which comes as Japanese electronics makers reel from slumping profits.
  
Sony, which sells Bravia flat televisions, Cyber-shot digicams and PlayStation 3 video game consoles, plans to raise some product prices in Europe to offset the blow from a stronger yen.
  
The group said it would axe about 10 percent of its manufacturing sites, cut investment in its electronics business by about 30 percent and downsize or withdraw from unprofitable areas.
  
"Our first impression was somewhat negative, as this is not a major restructuring which will fundamentally change the business model," Credit Suisse analyst Koya Tabata said.
  
Tabata said Sony's planned reduction in business investment was less drastic than a 50 percent cut that he had expected.
  
He expects Sony to post a net loss of 22.6 billion yen (244 million dollars) in the financial year to March.
  
Japan's electronics giants are facing tougher times after enjoying several years of strong profits, as consumers tighten their purse strings amid recessions in major economies from the United States to Japan and Europe.
  
The company, which changed the way the world listens to music with the Walkman, has endured a difficult spell in the face of tough competition from rival products such as Apple's iPod and Nintendo's Wii.
  
Under its first foreign boss, Howard Stringer, a Welsh-born US citizen, the group has already shed non-core assets and axed thousands of jobs, which helped bring about a recovery in profits last year.
  
But with demand worsening and the yen soaring, Sony's operating earnings plunged 90 percent in the second quarter of the financial year.

Date created : 2008-12-10

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