Sony aims to slash 10,000 jobs

Sony aims to cut its costs by $1.8 billion, eliminating 20 percent of product models and slashing 10,000 jobs by March 2008, said Howard Stringer, chairman and chief executive officer of the consumer electronics maker at a press conference in Tokyo on Thursday.

The company seeks to achieve 5 percent profitability by reviving its performance in electronics, especially TV sales, and will concentrate management responsibilities for that division under electronics CEO Ryoji Chubachi, Stringer said.

“Restructuring, we think, will establish a very, very fast, dynamic growth,” Stringer said. “So much [is] going in different places in different times, so creating horizontal business lines … breaking down the sides of the walls so there is constant communication … means we can move things much faster,” he said.

“I think it’s an exciting change for the company.”

Under the overhaul plan, Chubachi, who is also president of Sony, said he will have strategic committees underneath him dealing with customer views, production and technology, each working across the company’s electronics operations.

The three-year plan is the fruit of the new management team’s first 100 days, Stringer said. The executives reviewed Sony’s performance beyond the frameworks of each division and region. The team examined the manufacturing and operational structure while taking into account opinions of customers, distributors, suppliers and investors. The management also considered e-mail suggestions from more than 2,000 employees, said Stringer.

Chubachi said the cost cuts will be achieved by scaling down the company’s presence in 15 unprofitable fields, or withdrawing from them altogether. Stringer and Chubachi declined to identify the 15 fields “because of their marketing strategy.” The company will also shut 11 of its 65 manufacturing plants, Chubachi added. Sony will also cut 10,000 jobs — 4,000 in Japan and 6,000 overseas — and sell selected assets, including real estate and stocks, he said.

Meanwhile, Sony will vigorously push sales of its Bravia brand, a series of LCD (liquid crystal display) televisions, Chubachi said. In the U.S., the company has already gained the No.1 share in the LCD field.

Stringer said Sony will improve its sales in fields other than electronics. The success of PlayStation 3, which will be released in the spring of 2006, will be “vital” for the company, said Stringer, who also mentioned his confidence in the sales of PlayStation Portable worldwide. With cell phones and the new Walkman music player series, Sony will show its strength in mobile entertainment, he said.

Sony’s changes have already begun. On Tuesday, Sony announced that Fujio Nishida, currently corporate executive vice president in electronics marketing, will replace Chris Deering as president in the European market from November.

Sony is already in the middle of a restructuring plan, launched in October 2003. Transformation 60 was intended to achieve overall profit margins (excluding financial business) of at least 10 percent by March 2007, through a focus on electronics and entertainment businesses, coupled with more efficient structure. Part of that plan was to lay off 20,000 staff over the three years, the company said.

In March, though, Stringer said the company had not performed well enough to make that profit goal. Stringer succeeded Nobuyuki Idei, former chairman and CEO of Sony, in June.

Stringer said the new plan will not result in a one-time event: The company will keep improving its operations, he said.

“This change is continuous in the environment of profit and demands,” he said. “Creating this change … will make an enormous difference to Sony.”