Electronic slowdown spurs pinkslips
Ailing Sony Corp., facing tough challenges in its flagship electronics biz, announced a major overhaul Tuesday that will eliminate 20,000 jobs worldwide over the next three years.
The figure includes 7,000 in Japan. Sony has a total of 154,500 employees worldwide. As the giant Japanese conglom seeks to cut costs and boost profits, the ax will fall across divisions. Some 300-500 jobs are expected to be lost at Sony Pictures Entertainment. Sony Music, which already announced a 10% workforce reduction — about 1,000 jobs — in March, isn’t expecting any further pinkslips.
Meanwhile, speculation continues to swirl over music industry deals. Time Warner has been negotiating with EMI and some financial buyers, and Sony is believed to be in talks with Bertelsmann. Sony chairman Nobyuko Idei said the company is seriously evaluating all its options for the music operation but hasn’t made any concrete decisions.
In a statement, Sony said one key aspect of its overhaul is to integrate film, music, games and electronics “in innovative ways that dissolve traditional boundaries.” Such integration has been the company’s clarion call for years and has yielded mixed results.
Sony said it will introduce new music distribution services. And it will develop its Blu-ray mini-disc technology to grow a business centering on high-definition video.
Part of Sony’s restructuring includes pouring massive sums into developing next-generation television, particularly accelerating a transition to flat-panel, large-screen, high-resolution digital sets.
Company will invest ¥1 trillion ($9.24 billion) in semiconductor research over the next three years. Semiconductors support Sony’s home and mobile electronics businesses.
Electronics, Sony’s biggest business, has been a major trouble spot in recent years as the company lost a technological edge in some products and ceded ground to lower-priced competitors.
Sony’s goal is to cut fixed costs by $3.05 billion by the end of 2006 and reach operating profit margins of at least 10%.
Sony shares jumped 3.7% in New York on news of the revamp to close at $36.74.