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Sony to Announce Job Cuts
Sep 21, 2005
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Sony Corp.'s new management team looks set to announce on another round of job cuts and new investment in fast-growing digital electronics as part of its strategy to turn the company around. The consumer electronics maker will strive to strike a delicate balance between painful restructuring and forward-looking investments to drive growth and win back consumers and investors.

Sony is likely to accelerate the shift of resources to more promising digital ones such as next-generation DVD recorders, high-definition camcorders and flat panel TVs from analog products. Analysts say sizeable job cuts are likely as Sony downsizes its cathode ray tube (CRT) TV operations, narrows its R&D focus, and looks to eliminate head office staff.

But the trick for Howard Stringer and Ryoji Chubachi, who were recently appointed CEO and president, will be to convince investors that it can implement another round of restructuring without further stunting growth.

Sony has already slashed about 20,000 jobs under its current 3-year restructuring plan that runs through next March, but to no visible effect. Revenues have been shrinking and this year Sony is flirting with an operating loss.

"It's not good to focus only on how many people are cut or how much costs will be cut because if revenue also falls it is meaningless restructuring," Deutsche Securities analyst Yasuo Nakane said. "The point with this restructuring plan is to at the very least keep sales at the current level while simultaneously cutting costs. If such a message is made clear, the reaction should be OK or even positive."

Sony's stock has gained about 9 percent in the past 3 weeks in anticipation of the plan. But it has still lost about 90 percent of its value since hitting an all-time peak in March 2000. (Reuters)

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