Sony to cut workforce by 10,000

SONY IS preparing to cut its workforce by 10,000, or six per cent of its global headcount, as part of a restructuring initiated by its new chief executive that has seen it sell two divisions and drastically scale back its television production plans.

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 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 $17 billion in the fiscal year just ended.

The cuts are to be announced on Thursday at a strategy briefing by the new chief executive, Kazuo Hirai, who took charge on April 1st, people familiar with the matter said.

It will be the third significant round of staff reductions at the Japanese electronics and entertainment group since 2005.

Roughly half the cuts are the result of deals that have already been made public – Sony’s sale last month of a chemicals subsidiary to the Development Bank of Japan, a state-backed lender; and its decision last year to spin off production of small liquid crystal displays into a joint venture with Hitachi and Toshiba.

Together, the two businesses employ about 5,000 people; the jobs themselves will mostly remain after the sales, but the workers will no longer be on Sony’s payroll.

The rest of the reductions are expected to come from Sony’s chronically unprofitable television division, which is undergoing an overhaul that analysts say will be crucial to restoring the company’s financial health.

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

Sony estimates that it suffered an overall net loss of 220 billion yen (€2.05 billion) in the financial year that ended on March 31st.

In November, Sony slashed its medium-term sales target for LCD TVs by half, from 40 million to 20 million, giving up on an ambitious goal it had set only in 2009. The business has been in the red for the past eight years.

“We’re lowering production, so naturally we have to realign the workforce with our new goals,” one person briefed on the plans said. Sony declined to comment.

When Mr Hirai’s appointment as chief executive was announced in February, he promised to make “unavoidable, painful choices” to fix or dispose of loss-making operations and turn the company around.

His predecessor, Sir Howard Stringer, had implemented two major rounds of job cuts during his seven years as chief executive – 10,000 positions were eliminated over two years beginning in 2005 and a further 8,000 as the global financial crisis deepened in 2008.– (Copyright The Financial Times Limited 2012/Reuters)