Sony has issued an earnings warning and says it will cut 10,000 jobs and a number of product models over the next few years as it reorganises its electronics division in an effort to reduce costs.
The company now forecasts a net loss of ¥10 billion (NZ$130 million) for the fiscal year to March 31, compared to previous forecasts of a ¥10 billion net profit for the same period. Restructuring charges associated with the planned job cuts and reorganisation are responsible for this reversal of fortunes, the company says. The company still forecasts revenue of ¥7.25 trillion, unchanged from the forecasts it issued in July.
Sony aims to cut costs by ¥200 billion by the end of its 2007 fiscal year by shedding or downsizing 15 unprofitable businesses, cutting 20% of its product models and reducing the number of manufacturing sites from 65 to 54. These changes will result in 10,000 job losses, half of them headquarters and administrative staff, the company says.
In reorganising its electronics business, Sony is betting heavily on Cell, a microprocessor jointly designed with IBM and Toshiba that it expects to use in future video game consoles. Sony’s chief executive officer will directly oversee the division which promotes and develops the processor and related products and technologies.
A similar product-specific focus will be extended to the whole of the electronics division, with the abolition of the existing structure of “network companies” and the creation of clear business groups for specific product categories, Sony says.