10,000 jobs lost.
Sony Corp. unveiled a series of restructuring moves today (Sept. 22) including a 7% reduction, or 10,000 jobs, of its global workforce aimed at reversing the Japanese electronic giant's poor results in recent years.
Sir Howard Stringer, who earlier this year became Sony's first non-Japanese
CEO, and other top Sony executives also announced that the company will sell more than 120 billion yen's ($1.1 billion) worth of assets. It plans to close 11 of 65 manufacturing facilities worldwide and will post a loss in the current fiscal year.
The company will also abolish the in-house "company system" to improve communication among newly defined business groups.
Sony projects that restructuring costs will lead to a group operating loss of 20 billion yen ($180 million) in the business year ending March 2006, in contrast to the company's previous estimate of an operating profit of 30 billion yen ($270 million) for the term.
One key change in the company's operations will be to give centralized decision-making authority in the electronics business to Ryoji Chubachi, who became Sony's new president and electronics CEO in June.
"We've lost our operational strength," said Chubachi. "For five years we've been stagnating and our profits have been declining."
Stringer compared Sony's situation to that of the Russians defending Moscow against Napoleon, saying the company needs to adopt a "scorched-earth" policy.
Sony projects the moves will enable it to return to profitability on a consolidated basis in the business year ending March 2007 as well as achieving a 5% operating profit in the business year ending March 2008.
In the music field, Stringer said there are no immediate plans to merge Sony
Music Entertainment (Japan) and BMG Japan, which remain separate entities despite the Sony-BMG merger in the rest of the world.
"We are all, including BMG, very conscious that SMEJ is astonishingly successful," Stringer said. "We're not looking to mess with that formula just yet. At the moment, the relationship between SMEJ and Sony-BMG has never been better. This isn't a priority for me at the moment."