Sony Cuts 10,000 Jobs, Suffers Record Losses

Japanese consumer electronics giant Sony will cut 10,000 jobs, or six percent of its global workforce, in an effort to cut costs, the company announced on Monday.

On Tuesday, Sony revealed record net losses of $6.4 billion (£4b), after a fourth year of not turning a profit.

New Sony CEO Kazuo Hirai has announced the lay-offs will take place during the next two years, alongside serious restructuring of the company. Hirai hopes he can return it to profit by the end of next financial year.

Tough love

According to Nikkei, a stock market index for the Tokyo Stock Exchange, as many as 5,000 job cuts will come from reorganising businesses making chemicals and small to medium-sized display panels.

The huge losses of £4 billion are more than double those predicted in the annual forecast in February. Sony blamed the slump on strong competition from Apple and Samsung, the effects of the floods in Thailand and an unfavourable exchange rate. Weak demand for TVs, one of the company’s core businesses, didn’t help either, alongside a tax charge tied to assets in the US.

Standard & Poor’s and Moody’s Investors Service have both downgraded Sony, and according to Bloomberg, the company worth $200 billion (£126bn) in September 2000 is now valued at $20 billion (£12.6bn).

However, the recent change of leadership might give Sony a much-needed boost. This month, Kazuo Hirai, 51, has replaced Sir Howard Stringer, 70, as the CEO of the company. He began taking extreme measures by cutting 10,000 jobs, but promised to get the TV business back on its feet by 2014.

It is not just regular workers who are feeling the pain. Sony’s tough position meant that the group’s top seven executives had to give up their annual bonus.

It seems that the job cuts are having the intended effect: “Shares are going up because of the Nikkei report,” Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co, told Bloomberg. “The market expects that it will contribute to improvement of their business.”

The company predicts a swing back to an operating profit of 180 billion Yen (£1.4bn) for the fiscal year ending in March 2013.

One country that is not going to suffer from the job cuts is India. The company’s local arm told Press Trust of India that rather than decreasing, it is ramping up its head count in the region to meet growing demand.

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