"Sony will change" says CEO; to cut 10,000 jobs

Sony Corp said it is to cut around 10,000 jobs - 6 percent of its global workforce - as new CEO Kazuo Hirai moves to reduce costs and staunch huge losses at the Japanese electronics giant.

After a brief honeymoon since taking over from Howard Stringer this month, Hirai this week doubled Sony’s annual loss forecast to a record $6.4 billion, and is under pressure to fix an ailing TV unit and turn around a brand that has been trampled on by consumer gadget leaders Apple Inc and South Korea’s Samsung Electronics.

“We have heard a multitude of investor voices calling for change,” Hirai told a packed news conference at Sony’s Tokyo headquarters, close to the company’s first factory established 65 years ago. “Sony will change.”

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“Sony has always been an entrepreneurial company. That spirit has not changed,” he said.

In a statement ahead of the briefing, Sony said it would post a restructuring charge of about 75 billion yen in the year to March 2013, and aims to cut its fixed costs in the TV business by 60 percent in the 2013/14 business year from this year’s levels, and trim 30 percent off the business’ operating costs. Eyeing new business opportunities in the fast-growing medical business, Sony said it was targeting annual sales of 50 billion yen in that sector in 2014/15, and was scouting for acquisitions and other strategic investments. The job cuts follow two rounds of layoffs Stringer made in his six-year tenure at Sony. Chief Financial Officer Masaru Kato noted earlier this week that around 5,000 workers would come off the Sony payroll with the sale of a chemicals business and a small liquid crystal display fabricator.

Grinding the axe

Sony, and other leading Japanese TV makers Sharp Corp and Panasonic Corp have been battered by weak demand, fierce competition and a stronger yen that makes exports less competitive. The three companies expect a combined loss for the year just ended of $21 billion - more than Sony’s entire market value, which has slumped by close to a fifth in the past month. Samsung is 10 times more valuable, while Apple, which Sony executives considered buying in the early 1990s, is worth 30 Sony’s.

“Japan’s consumer electronics industry is facing defeat,” Fujio Ando, senior managing director at Chibagin Asset Management, said earlier this week.

Late last month, Hirai, a 26-year Sony veteran, revealed his management team and a rejigged business structure, with him taking a more active role in the day-to-day operations than Stringer. He eliminated his old job as head of consumer products, and put himself in charge of home entertainment, overseeing the money-losing TV business.

All heads of Sony’s 14 business units - from semiconductors to mobile communications, music and medical - report directly to the CEO.

Hirai had vowed to take “painful steps”, insisting he wouldn’t shy away from weeding out poorly performing businesses or making cuts to bolster profitability.

Sony shares closed 0.9 percent higher at 1,528 yen on Thursday ahead of the briefing. The benchmark Nikkei average ended up 0.7 percent.

Reuters