Sony plans to cut up to 20,000 jobs by 2006

It will stop making TVs in Japan, reduce costs

October 21, 2003|By BLOOMBERG NEWS

Sony Corp., the world's second-largest maker of consumer electronics, plans to cut as many as 20,000 jobs, about 10 percent of its work force, by March 2006 as it stops making televisions in Japan and reduces administration costs, the Nihon Keizai newspaper said.

"We are going to exit unprofitable business, sell or dispose of nonstrategic assets, reorganize global manufacturing, slim down sales and back office divisions, especially in Japan," spokesman Shigenori Yoshida said, without providing details. Sony, whose profit plunged 98 percent in the three months that ended June 30, will include the details in a plan to be announced on Oct. 28.

Sony, which had 161,000 workers at the end of March, had resisted the kinds of cuts that have claimed as many as 70,000 jobs at electronics companies such as NEC Corp., Fujitsu Ltd. and Toshiba Corp. over the past three years. The cuts would follow a vow by chief executive Nobuyuki Idei to increase profit margins to 10 percent from 4 percent after subtracting overhaul costs.

"Consumer-electronics makers need to cut costs because it's becoming much more difficult to continue to grow sales," said Makoto Suzuki, who manages the equivalent of $137 million at Chuo Mitsui Asset Management Co., including Sony.

Sony's shares have dropped 16 percent since Jan. 1, making them the fifth-worst performer on the Nikkei 225 Stock Average in that period.

Led by Idei, Sony is relying on new products such as a hand- held game player and the PSX, a type of game console with a hard disk drive and television tuner, to stimulate sales.

Idei will attend next week's meeting when Sony unveils its reorganization, as will Sony President Kunitake Ando.

Sony shocked investors and analysts in April by reporting a wider-than-expected fourth- quarter loss after sales at its game business fell by 25 percent and demand for stereos and televisions slumped.

The maker of the PlayStation 2 video-game console, second to Matsushita Electric Industrial Co. in sales of consumer electronics, has been late in making the kinds of job cuts some of its competitors have.

An overhaul at some of the Sony's most unprofitable businesses has begun. Sony Music Entertainment Inc., the company's New York-based music unit, predicted in March that it will save about $100 million a year by cutting 1,000 workers.

Sony said in May that it would spend 140 billion yen ($1.29 billion) by March 31 to shed jobs and close factories.

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