Sony to Eliminate 10,000 Jobs, 6% of Workforce, Nikkei Says
Sony Corp. (6758), the Japanese electronics maker that has forecast a fourth straight annual loss, will slash about 10,000 jobs, or 6 percent of its workforce, the Nikkei newspaper reported on its website.
As many as 5,000 job cuts will come from reorganizing businesses making chemicals and small-and medium-sized panels, the Nikkei reported. George Boyd, a spokesman for the Tokyo- based company, declined to comment when contacted by phone.
Chief Executive Officer Kazuo Hirai, 51, who took the helm this month from Howard Stringer, has vowed “painful” steps to turn around Sony as consumers flock to devices from Samsung Electronics Co. and Apple Inc. (AAPL) Standard & Poor’s and Moody’s Investors Service have both downgraded Sony, which in February more than doubled its annual loss forecast, blaming a stronger yen, production cuts caused by last year’s floods in Thailand and the cost of exiting a display-panel venture with Samsung.
“The job cuts are just a temporary fix for Sony,” Mitsuo Shimizu, a Tokyo-based analyst at Cosmo Securities Co. said by phone today. “This wouldn’t help address the company’s real problems, like the slumping TV business.”
Sony rose 0.6 percent to 1,644 yen at the close in Tokyo trading. The stock has gained 19 percent this year after slumping 53 percent last year.
“Shares are going up because of the Nikkei report,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co. “The market expects that it will contribute to improvement of their business.”
The cost to insure the debt sold by Sony was unchanged at 185 basis points this morning, prices from BNP Paribas SA show. The company’s credit-default swaps climbed 12 basis points this year after increasing 123 in 2011, according to CME Group Inc.’s CMA.
Hirai is scheduled to elaborate on his management plan April 12 for the company that set the trend during the 1980s with products such as the Walkman. Sony, worth $200 billion in September 2000, is now valued at $20 billion, compared with $591 billion for Apple and $170 billion of Samsung.
The new CEO, who’s been credited with making the PlayStation game business profitable, is bringing in a new team and has put himself in charge of Sony’s TV business, which is forecast to lose money for an eighth consecutive year.
In February, Sony predicted it would post a loss of 220 billion yen ($2.7 billion) in the year ended March 31. A fourth consecutive annual loss would be a first for the company since it listed in 1958.
Stringer Job Cuts
Hirai has already taken action on turning around the TV business. Last year, Sony exited a panel-making venture with Samsung. The sale of the stake in the venture to the South Korean company will save about 50 billion yen in costs at Sony’s TV operation.
Hirai took over from Stringer, 70, who is to become chairman of the board after a shareholder meeting in June. Stringer, who took over in June 2005, replaced division leaders to spur cooperation and cut 30,000 jobs to revive earnings.
In 2005, Stringer announced the company will eliminate 10,000 jobs and shut 11 factories after predicting the company’s first annual loss in more than a decade.
Stringer followed that in 2008, by announcing plans to eliminate 16,000 jobs -- then the largest reduction announced by a Japanese company since the credit crunch drove the world into a recession.
Standard & Poor’s cut Sony’s credit rating one level in February to BBB+, S&P’s third-lowest investment grade, because of falling prices, waning demand and tougher competition. The announcement followed downgrades by Moody’s and Fitch Ratings, which cited difficulty in turning around the unprofitable TV business.
“I expect the new president, Hirai, to cut unprofitable sectors and rebuild the company,” Shinkin’s Fujiwara said.
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