Saturday, January 24, 2009

Cuts, trendy gadgets will get Sony back on track, pledges CEO

TOKYO: Sony projected yesterday that it would report its first annual net loss in 14 years, and chief executive Howard Stringer vowed to turn around the company with pay cuts, job reductions and trendier gadgets.

"The massive economic upheaval being experienced across the globe is sparing no one in the consumer electronics world," Stringer said at Sony's Tokyo headquarters after it announced the earnings revision.

Battered by slumping sales and a strong yen, the Japanese electronics and entertainment company expects to sink into a 150 billion ($3.195 billion) net loss for the fiscal year through March, a reversal from 369.4 billion profit the previous year.

To cope with the slowdown, Sony said last month it would cut 8000 of its 185,000 jobs around the world and shut five or six plants - about 10 per cent of its 57 factories. It would also trim 8000 temporary workers not included in the global work force tally. Sony said yesterday it planned to cut a further 1000 temporary workers in Japan and close one of two domestic TV plants.

Sony also will offer early retirement packages to its regular, full-time workers in an effort to cut 30 per cent of its personnel costs in its TV business by March 2010. It refused to give a head count but said they were part of the 8000 job cuts announced earlier.

Stringer also said he and two other top executives, including President Ryoji Chubachi, would give up their entire bonus, reducing their annual pay by half. Other executives and managers would see lower pay.

Stringer said such steps weren't enough. Sony needed to be more aggressive in cutting costs by avoiding redundancies, streamline the supplier chain and anticipate the trends in internet-linking gadgets like the interactive TV set, he said.

"There is still a lot of the old Sony, and not enough of the new Sony," he said, acknowledging intense competition from growing rivals like Samsung Electronics, Apple and Microsoft.

Stringer said he was aware of the relatively protective lifetime employment regulations in Japan for full-time workers, adding the company would "tread very, very carefully".

Sony, which makes the Walkman player and PlayStation 3, also lowered its sales forecast for the fiscal year through March to decline 13 per cent to 7.7 trillion yen. In October, it had expected 9 trillion in sales.

The efforts announced yesterday are expected to save Sony 250 billion for the year ending March 31, 2010, but the restructuring measures will cost 170 billion.


Source :