Sony to slash 10,000 jobs

Written by Bloomberg | Updated: Apr 10 2012, 08:23am hrs
Sony, the Japanese electronics maker that has forecast a fourth straight annual loss, will slash about 10,000 jobs, or 6% of its workforce, the Nikkei newspaper reported on its website.

As many as 5,000 job cuts will come from reorganising 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 and Apple. Standard & Poors and Moodys 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 years 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 said by phone on Monday. This wouldnt help address the companys real problems, like the slumping TV business.

Sony rose 0.6% to 1,644 yen at the close in Tokyo trading. The stock has gained 19% this year after slumping 53% last year. Japans largest consumer-electronics exporter had 168,200 employees as of March 31, 2011, according to data compiled by Bloomberg.

Shares are going up because of the Nikkei report, said Naoki Fujiwara, chief fund manager at Shinkin Asset Management. 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 show. The companys credit-default swaps climbed 12 basis points this year after increasing 123 in 2011, according to CME Groups CMA.

Hirai is scheduled to elaborate on his management plan on 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, whos been credited with making the PlayStation game business profitable, is bringing in a new team and has put himself in charge of Sonys 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.

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 Sonys 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 companys 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.

S&Ps cut Sonys credit rating one level in February to BBB+, S&Ps third-lowest investment grade, because of falling prices, waning demand and tougher competition. The announcement followed downgrades by Moodys and Fitch Ratings.