Sony to slash 16,000 jobs globally

Sony Corp plans to eliminate 16,000 jobs in the largest reduction announced by a Japanese company since the credit crunch drove the world into a recession.

Sony will curb investments, outsource production and move away from unprofitable businesses by March 2010, as part of plans to save more than 100 billion yen ($1.1 billion) a year, the Tokyo-based company said. The job eliminations will take place in the electronics division and include 8,000 contract workers, it said.

The reductions highlight the severity of the slump in consumer spending at a time when companies typically focus on the peak Christmas shopping season.

Sony, the world’s second largest maker of consumer electronics, said a much larger than anticipated deterioration in the economy spurred the cuts and the company may revise its midterm targets.

“I can’t see how the company will regain its charm with consumers,” said Hiroshi Sato, chief investment officer of Tokyo-based GCSAM Co, who sold his Sony Holdings. The company might suffer from a bigger earnings decline in the second half, or even losses, if it doesnt take any measures. The company said it will announce the financial impact
of the measures in January, when reporting fiscal thirdquarter results.

The reason for this move is the deterioration of the economy, which was much larger than we expected, senior vice president Naofumi Hara said.

Sony on Oct 23 said net income will probably drop 59% in the year ending March 31, reducing the outlook by 38% as the stronger yen and slumping demand undermine sales of its electronics including Bravia televisions.

The electronics maker will review the impact of the reorganization steps and revise its current-year and mid-term profit targets if needed, Hara said, without elaborating. The company faces no problem with cash flow, he said.

Source: Agencies