Sony to refocus business, cut 10,000 jobs

September 23, 2005 — To improve competitiveness, Sony will be focusing on its three core sectors: electronics, games, and entertainment, and will be reducing costs, including cutting 10,000 jobs over the global group, a company release said. Sony is focusing on revitalizing its electronics business through structural reforms. Sony wants to achieve consolidated sales of over 8 trillion yen (US$72B) and an operating profit margin of 5% (electronics 4%) by the end of FY07.

Sony is reorganizing the electronics group to place centralized decision-making authority over key areas under the Electronics CEO. Sony said in a news release that “this substantial change abolishes the company system and assures coordination and focus across newly defined business groups. Rigorous horizontal coordination in key areas-product planning, technology, procurement, manufacturing, and sales and marketing-will allow rapid and streamlined decision making across product lines. This will also permit uniform software development that will assure seamless interoperability between our products, eliminate design and product redundancies, and assure decisive and rational R&D planning and spending.

“In addition, our structural reforms are expected to achieve a 200 billion yen reduction in costs by the end of fiscal year 2007. This will include rationalizing unprofitable businesses, reducing the number of product models, and consolidating manufacturing sites, leading to a reduction of 10,000 in the global group headcount. We will also review our real estate, stock holdings and certain non-core assets with a view to making disposals amounting to 120 billion yen by the end of fiscal year 2007. Reports on the progress of our structural reforms will be given quarterly.”

Sony said that their growth strategy in electronics, will be to focus resources on HD products, mobile products and the semiconductors/key component devices that can further differentiate Sony’s products from the competition. A division to promote the development of Cell processor-related technology, products and applications will be created reporting directly to Sony’s CEO.


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