A quick look around the just opened Flatbush, Brooklyn location of
Sony, Microsoft and LG Electronics all reported the adverse effects of the ongoing worldwide recession last Thursday with varying amounts of bad financial news.
Sony warned it would report an annual operating loss of $2.9 billion for its fiscal year ending March 31; Microsoft reported it would lay off 5,000 employees in the next 18 months, and LG reported a fourth-quarter net loss.
This is on top of Bose planning a layoff of 10 percent, or around 1,000 employees (see p. 4); Bang & Olufsen cutting costs and issuing layoffs (see p. 12); and Samsung reorganizing its operations and management in Korea (see p. 4) just prior to issuing its quarterly financial report (visit www.TWICE.com). And TomTom said the same day it will cut 115 jobs, reducing its global workforce by 7 percent, as a result of the current economy (see p. 49).
Sony blamed lower consumer demand, price erosion and currency fluctuations for its projected $2.9 billion loss for its fiscal year ending March 31.
The first annual loss for Sony in 14 years, it is larger than the $1.1 billion speculated on in the the Japanese press two weeks ago.
Sony’s revised consolidated results forecast also said its loss before income taxes should be $2.2 billion and its net loss should be $1.6 billion for the year. Sales and operating revenue are expected to go down 13 percent from the previous year to $85.5 billion.
Among the moves Sony will make to cut costs will be to issue layoffs of about 30 percent across its TV design operations and related divisions by the end of the fiscal year ending March 31, 2010, as well as close one of its TV design and manufacturing operations in Japan by June of this year.
Top executive bonuses for the fiscal year ending March 31 will be “substantially reduced” and there are plans in place to “decrease fixed remuneration ... in particular the three representative corporate executive officers will waive their entire bonus amount” for the fiscal year. Management-level employee bonuses and base salaries will also be reduced.
Sony will also introduce an early-retirement program in the near future.
In December Sony announced it would cut a total of 16,000 jobs, lower spending and close plants, which would save $1.1 billion.
Microsoft said it will cut up to 5,000 positions over the next 18 months, and about 1,400 jobs were eliminated last Thursday.
The news came during its earnings announcement during which the company reported revenue of $16.6 billion for its second quarter, ended Dec. 31, up 2 percent from last year. Net income was $4.2 billion, down from the $4.7 billion posted during the same period last year.
The cuts will come from the company’s R&D, marketing, finance, legal, human resources and IT staffs.
Chris Liddell, Microsoft’s chief financial officer, said in a prepared statement, “We are planning for economic uncertainty to continue through the remainder of the fiscal year, almost certainly leading to lower revenue and earnings for the second half relative to the previous year. In this environment, we will focus on outperforming our competitors and addressing our cost structure.”
LG Electronics reported a net loss for the fourth quarter, ended Dec. 31, due to foreign exchange losses and pricing pressure for flat-panel TVs, among other factors.
On a parent-company basis, LG reported sales of $4.84 billion for the quarter, an operating loss of $228 million and a net loss of $493 million.
In the fourth quarter of 2008, sales on a global basis rose 22.5 percent year on year to $9.82 billion and operating profit was $74.2 million, resulting in a profit margin of 0.8 percent.
For fiscal year 2008, annual sales on a global basis rose 20.8 percent to a record $36.2 billion with operating profit at $1.56 billion.
Consolidated sales including subsidiaries rose 18.4 percent year on year to $46.4 billion. Consolidated operating profit reached $2.97 billion, for a margin of 6.4 percent, 1.1 percent point higher than the previous year. — Additional reporting by Doug Olenick