Sony takes action amid global downturn

Sony, maker of the Walkman portable player and PlayStation 3 game console, announced today that it is embarking on a series of measures to strengthen its corporate structure and increase profitability in light of the current global economic condition. ┬á The news came as Japan stated its economy had shrunk between July and September by much more than initially expected, and a slew of similar stories from Japanese manufacturers facing decreases in demand had been hitting the airwaves. ┬á Sony has already cut production, lowered inventory levels, and reduced operational expenses as the electronics industry in particular has been hurt by plunging gadget prices, currency fluctuations, severe competition, and a worldwide slowdown in consumer spending. But drastic times call for drastic measures, and Sony announced plans to take further action.┬á The company said it will cut its investment in electronic operations by 30 percent, and shut down two oversea production facilities by the end of the current fiscal year, including Sony Dax Technology Center in France which manufactures tape and other recording media. The company also announced that it will further reduce its current 57 manufacturing sites by 10 percent before April 2010. ┬á┬á The company plans to cut 8,000 jobs in its electronics division, amounting to 4 percent of its global workforce. Sony employs 185,000 people worldwide, of which 160,000 are from its electronics business. The company did not give a country breakdown for the job cuts, but said that it will complete the layoffs by the end of March, 2010. ┬á ÔÇ£The number sounds big, but this staff reduction wonÔÇÖt be enough,ÔÇØ said Katsuhiko Mori, a fund manager at Daiwa SB Investments. ÔÇ£Sony doesnÔÇÖt have any core businesses that generate stable profits- the next thing we want to see is what is going to be the business that will drive the company.ÔÇØ┬á Sony said it aims to generate cost savings of about 100 billion yen by the end of next year, and plans to outline the anticipated impact of these measures in its updated forecast of financial results for the current fiscal year to be included in its third quarter earnings announcement, scheduled for January 2009.