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10,000 Sony Employees Will Lose Their Jobs


It was revealed on Monday that Sony (NYSE: SNE) is set to cut a full and devastating 10,000 jobs, roughly 6% of its global workforce. The move comes as new CEO Kazuo Hirai attempts to steer the company back into the black after four years in debt.

It does not seem to be a good time to be a worker in the electronics industry in Japan, as NEC and Panasonic (NYSE: PC) have all downsized in recent weeks, as they face competition from companies like Apple (NASDAQ: AAPL).

Tragically, the cuts will hardly come as a big surprise, as Sony, Panasonic and Sharp have lost a combined $17 billion in the fiscal year that has just ended.

In March, SNE announced that it was going to be selling off a chemical products division, and that accounts for roughly 3,000 people. On April 1, it merged the Sony Mobile display unit (2,000 workers) with the LCD panel businesses of Toshiba and Hitachi. The new firm will be called Japan Display.

In addition, SNE may ask its seven executive directors to return their bonuses. That seems fair and, if it saves just one job, then it's a worthwhile endeavor. On Monday, JP Morgan published a research report stating that the April 9 edition of the Nihon Keizai Shimbun reports that Sony plans to cut 10,000 jobs worldwide, and that seven executive officers including Chairman Howard Stringer have decided to forgo their FY2011 bonuses.

"Although Sony is not commenting on the remaining 5,000 jobs at this stage, it has indicated plans to slim its marketing operations, mainly overseas, so we think it will very likely make an announcement in line with the print media report at its management briefing scheduled for April 12."

Bank of America Merrill Lynch said that Sony is likely to target deep cuts in fixed costs. Much should depend on the details, but cutting 5,000 jobs excluding the business sales would knock ¥50-75bn off fixed costs, just about matching the fixed cost-savings needed for the TV business to turn profitable, and it would see this as positive.

"Winning back the ground Sony has lost in smartphones should be a key theme. Kunimasa Suzuki, who is in charge of product lines such as VAIO, has been appointed to head up the closely-watched mobile communications segment. He will therefore be responsible for all network-related hardware, including games, allowing the creation of a platform that offers perceived integration."


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