Sony to cut global workforce by 10,000

Sony president Kazuo Hirai will announce cuts in its workforce on Thursday at a strategy briefing.

Story highlights

  • Sony is preparing to cut its workforce by 10,000, which is 6 per cent of its global headcount
  • The cuts are to be announced on Thursday by Kazuo Hirai, the news chief executive
  • It will be the third significant round of staff reductions at the Japanese group since 2005

Sony is preparing to cut its workforce by 10,000, or 6 per cent of its global headcount, as part of a restructuring that has seen the Japanese electronics and entertainment group sell two divisions and drastically scale back its television production plans.

The cuts are to be announced on Thursday at a strategy briefing by Kazuo Hirai, who took over as chief executive on April 1, people familiar with the matter said. It will be the third significant round of staff reductions at the Japanese group since 2005.

When Mr Hirai's appointment as chief executive was announced in February, he promised to make "unavoidable, painful choices" to fix or dispose of lossmaking operations and turn the company round after what will be its fourth straight year in the red.

About half the job cuts result from deals that have already been announced: Sony's sale last month of a chemicals subsidiary to the Development Bank of Japan, a state-backed lender, and its decision last year to spin off production of small liquid crystal displays into a joint venture with Hitachi and Toshiba.

Most of the 5,000 workers employed by the two businesses will keep their jobs but will no longer remain on Sony's payroll.

The rest of the reductions are expected to come from Sony's chronically unprofitable television division, which is undergoing an overhaul that will be crucial to restoring the company's financial health. Sony estimates that it suffered an overall net loss of Y220bn ($2.7bn) in the financial year that ended on March 31.

In November, Sony halved its medium-term sales target for LCD TVs from 40m to 20m, abandoning an ambitious goal it had set only in 2009. The business has been in the red for the past eight years.

"We're lowering production, so naturally we have to realign the workforce with our new goals," one person briefed on the plans said. Sony declined to comment. Mr Hirai's predecessor, Sir Howard Stringer, had implemented two rounds of job cuts during his seven years as chief executive: 10,000 positions were eliminated over two years beginning in 2005 and a further 8,000 as the global financial crisis deepened in 2008. An additional 8,000 temporary workers who were not considered part of Sony's official headcount also lost their jobs in the latter round of reductions.

Sony's share price closed 0.6 per cent higher against an otherwise sagging Tokyo market as news of the latest job cuts began to emerge on Monday.

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