[opendtv] Re: News: Sony Plans 10,000 Job Cuts
- From: "John Willkie" <JohnWillkie@xxxxxxxxxxxxx>
- To: <opendtv@xxxxxxxxxxxxx>
- Date: Sun, 25 Sep 2005 21:26:05 -0700
don't count on it. They don't know what products will be eliminated, so
this is just announcing their desires. And, they say the transition won't
be over until 2008. I doubt it will start in earnest before then.
I'm a big fan of Sony, particularly in consumer electronics, and only after
the last 10 years are disregarded. Like no other.
John Willkie
----- Original Message -----
From: "Craig Birkmaier" <craig@xxxxxxxxx>
To: "OpenDTV Mail List" <opendtv@xxxxxxxxxxxxx>
Sent: Friday, September 23, 2005 4:54 AM
Subject: [opendtv] News: Sony Plans 10,000 Job Cuts
> http://www.nytimes.com/2005/09/23/business/23sony.html?th&emc=th
>
> Sony Plans 10,000 Job Cuts
>
> By MARTIN FACKLER
>
> Published: September 23, 2005
>
> TOKYO, Sept. 22 - Sir Howard Stringer, the new chief executive of the
> Sony Corporation, unveiled a turnaround plan Thursday that would cut
> 10,000 jobs, shed unprofitable products and centralize
> decision-making at the struggling, sprawling Japanese electronics
> giant, known for its Walkman portable music players and PlayStation
> game consoles.
>
> In a further sign of tough times, Sony said it expected to post its
> first annual loss this year in more than a decade.
>
> The company said it now foresaw a loss of 10 billion yen, or $90
> million, for the fiscal year ending March 31, down from a previously
> forecast $90 million profit.
>
> Sir Howard released his widely awaited plan three months after taking
> office in June. He promised to return Sony to profitability in the
> next year, saying that job reductions, product eliminations and other
> moves, including closing 11 of its 65 factories, would save almost $2
> billion over the next two and a half years.
>
> But he admitted that cost-cutting alone was not enough to ensure Sony's
future.
>
> The plan also includes organizational changes aimed at improving
> communication between Sony's notoriously autonomous divisions. Sir
> Howard said he hoped this cross-fertilization would help create new
> ideas and products, allowing Sony to stay ahead of low-cost rivals in
> China and South Korea who are quickly climbing the technology ladder.
>
> "We must be like the Russians defending Moscow from Napoleon,
> scorching the earth ahead of our competitors," he told reporters.
>
> In the short term, that could mean consumers might see fewer
> lower-end electronics, like DVD players or even laptops, with the
> Sony name. In Thursday trading on the New York Stock Exchange, Sony's
> shares fell $2.02, to $33.95.
>
> In the long run, though, analysts say the key to Sir Howard's success
> would be his ability to revive the sort of innovation and development
> that originally made Sony famous. One of the reasons the company has
> stumbled is a lack of hit products on the scale of the original
> Walkman portable music players.
>
> Sir Howard, a 63-year-old Welsh-born executive who commutes from New
> York to his family home in Oxfordshire, England, and to Sony
> headquarters in Tokyo, is Sony's first non-Japanese chief executive.
> He is under pressure to fix the company's critical electronics
> business, which accounted for 70 percent of its $65 billion revenues
> last year but which has been losing money as cheaper Asian producers
> drive down global prices.
>
> Analysts say Sir Howard must also give a common focus to a
> conglomerate that has fingers in everything from computer chips to
> banking. They blame poor coordination within the company for such
> failures as Sony's slow reaction to the rise of the Apple iPod. The
> company only this year started introducing sleek Walkmans to
> challenge iPod's dominance in portable music players - a market Sony
> invented in 1979 with its first Walkman cassette player.
>
> Sir Howard spent his first three months at Sony's helm meeting
> employees and visiting far-flung operations to draw up the plan,
> which he dubbed "Sony United."
>
> The centerpiece is the creation of 13 groups to centralize control of
> product development by coordinating across division lines. The move
> appears to add a layer of management, but those product category
> groups will report directly to Sony's president, Ryoji Chubachi, who
> is in charge of electronics operations.
>
> As an example of the sort of cooperation he hopes to achieve, Sir
> Howard cited the various Sony arms involved in the PlayStation 3, its
> next-generation game console due out next spring. The console will be
> built by Sony's computer and entertainment subsidiary, but use
> content from its movie and music units. At the same time, it will
> rely on the speedy Cell microprocessor co-produced by Sony's
> semiconductor division and IBM and Toshiba.
>
> "We will galvanize groupwide resources like never before to ensure
> its success," he said.
>
> Still, some analysts were skeptical that the plan offered a blueprint
> for nurturing creativity or restoring growth. John Yang, an analyst
> in Tokyo for Standard & Poor's, said the overhaul did not go far
> enough in reorganizing the company or shaking it out of its
> complacency. Mr. Yang says he also believes that Sir Howard set too
> modest a goal in striving to reach only a 5 percent profit margin in
> two and a half years.
>
> Mr. Yang pointed out that the Japanese electronics maker Canon was
> routinely three times that profitable. "It's still unclear how Mr.
> Stringer will create growth," he said. "If I were to give him a
> grade, it would be a C plus."
>
> Sir Howard and other executives promised to address complaints that
> they said they had collected from consumers, employees and analysts.
> One criticism, they said, was that Sony products were too complex and
> difficult to operate.
>
> He also devoted much time to describing Sony's response to one of its
> biggest external challenges: competition from low-cost Asian rivals.
>
> Sir Howard said Sony would combat the tide of cheaper electronics by
> focusing on products in which its technology and brand name could
> demand a premium. He said the company must forgo products that rivals
> could mass-produce more cheaply. Though he did not name examples,
> analysts said that in addition to DVD players, this could mean
> shedding the company's Vaio line of laptop computers or its Aiwa
> brand of lower-end consumer electronics.
>
> Analysts said Sir Howard needed to repeat the success of Project USA,
> a sweeping overhaul that he imposed on Sony's United States
> operations, which he ran before taking his current job.
>
> He cut a third of Sony's 27,000-strong work force in the United
> States and saved $700 million in costs; the new plan cuts 10,000 jobs
> out of a global work force of about 152,000. Four thousand of those
> jobs will be lost in Japan. Sony will eliminate about 600 of the
> 3,000 product models it now produces. It plans to raise a $1.1
> billion by selling off nonessential assets like real estate and
> stocks.
>
> Analysts said the cost savings and assets sales would produce only a
> short-term lift. "Restructuring is just a temporary improvement,"
> said Hiroshi Takada, an analyst in Tokyo for J. P. Morgan. "Sony has
> to create innovation."
>
>
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