Sony To Cut 10,000 Jobs

Consumer electronics giant Sony today announced a major restructuring that will cut 10,000 jobs from its global work force, close nearly a dozen manufacturing plants and will downsize or terminate as many as 15 unprofitable business categories.

This announcement was concurrent with Sony revising a July forecast that predicted a $91 million profit in fiscal-year earnings. The costs associated with restructuring have apparently turned that expected profit into a $91 million loss. Sony believes that the restructuring will eventually save $1.8 billion in costs. The Wall Street Journal reported that Sony expects its operating-profit margin, which was around 1.6% for the last fiscal year, to increase to 5% for the fiscal year ending in March of 2008 as a result of the restructuring.

Aside from trimming down a payroll that currently supports over 150,000 people worldwide, the number of Sony manufacturing sites will drop from 65 to 54. Dropping out of business categories that are deemed unprofitable is expected to reduce the kinds of products Sony makes significantly. It's expected that the sheer number of Sony electronics products on the market could reduce as much as 20%.

Industry analysts note that Sony has struggled in recent years to cope with plummeting prices in all electronics, and especially TVs. Samsung and other cost-driven Asian manufacturers have cut into Sony's once monolithic market share. They also point to Apple's success in the lucrative digital music player market, along with the software and services it provides with its iTunes interface and music store, as a sign that Sony isn't the market force that it once was.

While Sony hasn't revealed which business categories it will abandon, of interest to UAV readers is word that no new development will take place in the high-end Qualia line. And one can only guess that those shi-shi Qualia stores, manned by "retail consultants" wearing black, tailored suits probably won't last too long without any new products to sell. And audiophiles may find out soon whether SACD really has a future or not.

Yet, in spite of reducing the number of products it sells, and slashing its global work force of over 150,000 by 6%, Sony CEO Howard Stringer's vision calls for Sony's sales to increase by nearly $8 billion over the next two and half years. The seemingly rosy expectations of increased sales may not be too far-fetched considering that Sony will be unveiling the PlayStation 3 gaming console and in all likelihood the Blu-ray Disc high-definition optical disc format in 2006. The affordable 1080p SXRD-based displays that are just hitting stores in time for the holidays won't hurt either.

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