Two days after reporting a record loss, Sony Corp has announced it is to cut close to 10,000 jobs (six per cent of its global workforce) as new CEO Kazuo Hirai moves to reduce costs 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 $6.4bn (£4.01bn). Hirai is under pressure to improve several of the company’s struggling sections which have been overtaken by consumer electronics leaders Apple 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.”
“Sony has always been an entrepreneurial company. That spirit has not changed,” he said.
The plan comes after Sony lost 919 billion yen in the past four years as the company that set the trend in 1980s with gadgets like the Walkman lost customers to Samsung Electronics Co. and Apple Inc. Hirai, who took the top job this month after earning a reputation for turning around the PlayStation game business, has vowed “painful” cost cuts and put himself in charge of the bleeding TV unit as part of the overhaul.
Eyeing new business opportunities in the fast-growing medical business, Sony said it was targeting annual sales of 50 billion yen ($617 million) 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.
Sony has cut 66,500 jobs since 1999, according to Keita Sanekata, a spokesman for the company, which had 168,200 employees as of March 2011, according to data compiled by Bloomberg.
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.