Sony To Cut 10,000 Jobs, Product Mix

By Doug Olenick On Sep 26 2005 - 6:00am

Sony CEO Howard Stringer made his first dramatic move since taking over the CE giant in June by announcing massive job cuts and a product realignment strategy.

The 10,000 layoffs represent 6 percent of Sony's staff and are part of a three-year-long restructuring plan that Stringer unveiled here. About 4,000 of the jobs eliminated will be Japan-based, with the remaining 6,000 from Sony's overseas operations.

A U.S. Sony spokesman said no specifics regarding the local impact of Stringer's decision have been passed down. Sony's U.S. operations were heavily hit during the company's last round of layoffs in 2003.

The only change announced with any regional impact was Sony Electronics' president/CEO Dick Komiyama being given the additional title of executive VP/corporate executive, placing him in charge of Sony's global electronics marketing efforts.

Additional changes include consolidating several television manufacturing facilities and streamlining its electronics division. The number of factories to will be reduced to 54, from 65. On the product side, Sony will cut 12 percent of its product lines and reduce by 20 percent the number of individual SKUs made. Specific details on the plant and production changes were not yet available.

The restructuring is expected to cost $1.9 billion but will eventually save the company $1.8 billion during that period. Long term, Sony believes the move will improve the company's operating profit for its fiscal year ending in March 2008, according to published reports.

Steve Baker, NPD Techworld's director, industry analysis, called Stringer's announcement hollow, repetitive and lacking substance. “We've heard all this before. What Sony has to do is figure out if it wants to be market share driven or be a company whose name stands for something. “

Baker said there are many areas where Sony should rethink its involvement including car audio, blank media and tube TVs, although he added there is still plenty of life left in this last category. PC peripherals, monitors and even desktop PCs also could be culled from Sony's mix.