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Sony to cut 10,000 jobs, revitalise TV business

By
Kaz Hirai, Executive Deputy President of Sony Corporation

© Sony

Struggling consumer electronics giant Sony has announced plans to cut 10,000 jobs worldwide and slash the number of TV models it makes by 40% as part of a major restructure.

Kazuo Hirai, the former PlayStation boss who took over as Sony chief executive this month, said that the job cuts, representing 6% of Sony's workforce, will be made over the next 12 months.

The cuts include employees outside of the Sony Group as part of the sale of non-core business units, such as its chemicals division.

Sony is projecting restructuring costs of 75 billion yen (£581m) in the current financial year.

The Japanese firm has struggled to compete in the television business with rival firms Samsung and LG, while Apple has bitten into its revenues for phones and audio products.

On Tuesday, Sony forecast a record annual loss of $6.4bn (£4bn), double the previous estimate, while its share price has fallen 40% over the past 12 months.

Hirai outlined a series of key initiatives to turn around Sony's fortunes, including a revitalisation of the struggling TV business, strengthening of its core areas of games, mobile and digital imaging, and further expansion into emerging markets.

The company hopes that the changes will generate sales of 8.5 trillion yen (£6.58bn) by the financial year ending in March 2015, delivering a profit margin of 5%. In the previous financial year, Sony reported sales of almost £5bn.

"We have heard a multitude of investor voices calling for change. Sony will change," Hirai said at a press conference.

"Sony has always been an entrepreneurial company. That spirit has not changed."

A key area for Hirai to address will be the TV business, which has lost money for eight years straight. Sony hopes to return the TV unit to profitability by 2014, and pointed out that panel costs have reduced following the end of an LCD joint venture with Samsung Electronics.

Sony is also taking further measures to change the TV business, including a 40% reduction in the number of models it produces by 2013 with the aim of reducing fixed business costs by 60%.

The image and audio quality of Sony's Bravia TV range will be enhanced to make it the "cornerstone" of the current television lineup, and the firm will also explore next-generation screen technologies like OLED and "Crystal LED Display", as well as more integration with its mobile products, such as smartphones.

Sony Mobile, the division formed after Sony bought out Ericsson in the Sony Ericsson joint venture, is expected to target 1.8 trillion yen in sales by the financial year 2014, including a significant profitability improvement.

Sony is also investigating new initiatives to earn revenue, including services for the medical industry and the "aggressive" promotion of 4K, a visual technology that delivers pictures four times the resolution of Full HD.

However, analysts have given a lukewarm response to Hirai's turnaround strategy.

Toshiyuki Kanayama, senior market analyst at Monex, told the BBC: "I don't see anything new here. They've talked before about bringing the TV business back to profits. The comments about the electronics business are the same.

"Nothing has changed from what they've flagged in the past, including the M&A plans in the medical field."

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