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Sony to axe 10,000 jobs in turnaround bid

Sony Corp's CEO Kazuo Hirai.

REUTERS

Japan's Sony Corp. is to cut 10,000 jobs, about 6 per cent of its work force, the Nikkei newspaper reported on Monday, as new CEO Kazuo Hirai looks to steer the electronics and entertainment giant back to profit after four years in the red.

The job cuts would be the latest downsizing in Japan Inc. where companies from cellphone maker NEC Corp. to electronics firm Panasonic Corp. are trimming costs in the face of a strong yen and competition from rivals like Apple and South Korea's 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.

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Investors will closely monitor a briefing on Thursday by Hirai, who formally took over this month as chief executive from Howard Stringer, for further clues on how Sony plans to revamp its business.

"Under a new CEO, it's easier to cut jobs or go in a new direction," said Yuuki Sakurai, head of fund manager Fukoku Capital, which had around $7 billion worth of assets under management as of end-March 2011, and which holds a small stake in Sony, according to Reuters data as of last July.

"One of the things I'd like to see is that they shift their resources to other areas outside TVs ... If they stick to TVs, they may have to fight a war they may not be able to win."

The Nikkei said half of the latest round of job cuts would come from consolidating the firm's chemicals and small and mid-size LCD operations.

Sony said last month it was selling a chemical products division, accounting for some 3,000 people, while on April 1 it merged its Sony Mobile display unit, which had about 2,000 workers, with the small LCD panel businesses of Toshiba Corp. and Hitachi Ltd. into a new firm called Japan Display.

The Nikkei said it was not clear how many of the cuts would take place in Japan or overseas.

As of end-March 2011, Sony had 168,200 employees on a consolidated basis, according to the company's website.

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Sony may also ask its seven executive directors who served through the fiscal year to end-March, including Mr. Stringer, who is now chairman, to return their bonuses, the Nikkei said.

Sony declined to comment on the report.

Sony announced 16,000 job cuts in December 2008 after the global financial crisis battered demand for its products, but it has not managed to make a profit since then.

The company has forecast a ¥220-billion net loss for the fiscal year just ended, hurt in large part by its ailing TV business.

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

Sony shares closed up 0.6 per cent, while the benchmark Nikkei average ended 1.5 per cent lower. The stock has dropped more than 10 per cent in the past three weeks since hitting a seven-month high.

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