On Sept. 20, 2005, Sony Corp. announced it would cut about 7% of its global work force, sell more than $1 billion in assets and post a loss this year, reports REUTERS. The company hopes to gain 210 billion yen ($1.9 billion) in restructuring charges in next the two business years through March 2007 as it closes plants and slashes 10,000 jobs. With the move, Sony hopes to catch up with Matsushita Electric Industrial and Sharp Corp. in the flat TV market as well as Apple Computer in the portable music industry.
"These are pretty moderate plans," Mizuho Securities analyst Koichi Hariya said. "Sony's shares gained in the run-up to today's announcement and feelings of disappointment may emerge. There could have been some investors who had expected more drastic measures from the new foreign ceo."
Sony estimates the restructuring will produce cost savings of 200 billion yen by the end of the business year March 2008, when it aims to achieve an annual group operating profit margin of 5% and more than 8 trillion yen in revenues.
"Sony and its peers all face tremendous pressure in the marketplace, but we have a sense of urgency and we have a sense of purpose. We can and will compete vigorously," Howard Stringer, Sony's new chief exec.
To help boost efficiency, Sony abolished the company system that Stringer said was preventing different business units from communicating freely and working together for common goals. The electronics group will be reorganized under Ryoji Chubachi, who became president and electronics ceo in a management reshuffle in June.
"We are going to achieve our goals by breaking down the existing silo walls and eliminating the highly decentralized structure we've maintained in the past," said Stringer, a former journalist and the first non-Japanese at the run of a major Japanese electronics company.
Sony said it now expected to post a group operating loss of 20 billion yen in the current business year in March. Sony's previous estimate was for an operating profit of 30 billion yen.
Over the past three years, Sony has cut 20,000 jobs.
Before the announcement, shares in Sony closed down 2.2% at 3,940 yen.