Japanese electronics giant Sony Corp plans to cut 10,000 jobs and restructure the company in an effort to reduce costs and revitalize itself. The layoffs represent 6% of the company’s global workforce.
At a press conference, Chief Executive Officer and President Kazuo Hirai explained a strategy intended to make Sony profitable again. In addition to reducing employees, Sony will spend $1 billion on restructuring.
Hirai said he was very serious about reviving the company and making the television unit profitable again by March 2014, with plans to spend $925.7 billion this fiscal year on restructuring.
Sony Sees Record Fiscal Loss in 2011
Sony's television unit has lost money for eight consecutive years, and Sony as a whole has lost money for four consecutive years. The last fiscal year marked the worst loss in the company's history, with an annual net loss of $6.4 billion.
Sony has struggled against competitors Samsung Electronics Co. and Apple Inc, and was also negatively impacted by flooding in Thailand.
Overall, Japanese electronics manufacturers have been affected severely by the sluggish global economy and the strength of the yen, which has seen competition upped with vendors offering lower prices.
Sony should release its forecasts and earning results in May.
Sales Increase Target Set at 10%
Hirai said he aims to increase sales 10% or $105 billion by March 2013.
In addition to reviving the television unit, Sony has also renewed commitment to its smartphone, PlayStation game console and digital camera businesses. It plans to expand its medical equipment business and move into emerging markets like India and Mexico.
"Our goal at Sony is to become a company that creates products and services that stimulate curiosity in customers around the world and gives them an emotional experience," Hirai said.
Despite Hirai’s optimism this isn’t the first time Sony has been forced to make changes to its company structure. In 2008, 16,000 jobs worldwide were cut, and in 2011, Sony sold its stake in a South Korean joint liquid crystal display panel venture to Samsung. That same year it bought out its Swedish partner in Sony Ericsson.
This March, Sony announced it would sell its chemical division to a Japanese bank.
Both Standard & Poor’s and Moody’s have downgraded Sony’s credit rating in 2012. Analysts now say Sony will need to make major changes to overcome its weaknesses and competition.
Key Statistics - Global TV Market (source: MarketLine)
- In 2010, the global TV and video market reached a value of $192 billion, having grown by over 6%.
- The global TV and video market is predicted to be valued at close to $271 billion by 2016. This would represent a 41% increase since 2010.
- The largest segment of the global TV and video market is television, which accounts for close to 80% of the total market value.
- Nearly 36% of the global TV and video market is the Asia-Pacific.