Sony, the giant Japanese electronics maker, plans to cut 6% of its workforce or around 10,000 jobs as they continue with their efforts to restructure their business, the 3rd job cut since 2005. It has already sold 2 divisions and is now scaling back its TV production.
According to Bloomberg’s data, the biggest consumer electronics exporter in Japan has 168,200 staff last year. Around half of the job cuts resulted from publicized deals the company has previously made. Last month, Sony sold a chemicals subsidiary to the Development Bank of Japan while it spun off small LCD production last year into a joint deal with Toshiba and Hitachi. The remaining 5,000 job cuts will come from its unprofitable TV division that is now being overhauled in hopes of restoring the firm’s health.
The 51-year old CEO, Kazuo Hirai, replaced Howard Stringer this month and immediately set out to do his promise of “unavoidable, painful choices” in order to turn the company’s operations into a more profitable one.
Hirai has been credited in making the PlayStation business profitable; now he is set to put himself in charge of and bring a new team for the firm’s TV business. Sony even revealed a new organizational chart that has omitted a management layer between the CEO and the head of TV department so Hirai could manage them directly.
Sony predicted that it might post a loss of USD 2.7 billion on March 31 — the 4th consecutive yearly loss which is unprecedented for the firm since 1958. Their television division is forecasted to lose money for the 8th year in a row because of stiff competition coming from Samsung of South Korea and Apple. As a comparison, Sony is being valued at USD 20 billion against USD 170 billion of Samsung and USD 591 billion of Apple.
More details regarding the job cuts are expected to be discussed on a strategy briefing on April 12, which will be led by Hirai. The lay-offs are the first glimpse into the new executive’s restructuring plan after he replaced Howard Stringer just this month. Cuts could reportedly be made over the course of 2 fiscal years, possibly ending in March of 2014.
The majority of the workforce reduction will come from selling businesses that are not included in the firm’s core business. However, the said job cuts are only a tentative solution for the company as that does not address their core problems, one of which is the poor television sector.
Fortunately, shares of Sony are rallying because of that report. Perhaps the market is optimistic that the company’s move would improve their overall business performance, along with the expectation that Hirai will not only slash unprofitable sectors but rebuild the company, too.