Sony to cut 8,000 jobs, slash $1.1 billion in costs

Damn....SONY??? You all remember when Sony was UNSTOPPABLE?? I wonder if we're gonna feel this here in the US.


By Nathan Layne

TOKYO (Reuters) - Japan's Sony Corp said it will slash about 4 percent of its workforce, scale back investments and pull out of businesses as it aims to cut $1.1 billion in costs out of its ailing electronics operations.

The 8,000 job cuts -- the biggest announced by an Asian firm so far in the financial crisis -- and other restructuring steps underscore challenges facing Sony, which has fallen well behind Apple Inc's iPod in portable music and is struggling to make money on flat panel TVs.

Analysts questioned if it would be enough for Sony, which employs about 186,000 people worldwide in businesses ranging from movie making to video games.

"The number sounds big, but this staff reduction won't be enough. Sony doesn't have any core businesses that generate stable profits," said Katsuhiko Mori, a fund manager at Daiwa SB Investments.

"After the workforce reduction, the next thing we want to see is what is going to be the business that will drive the company."

Shares in Sony, which have fallen nearly 70 percent this year, closed up 3.9 percent at 1,896 yen ahead of the announcement. For a graphic tracking Sony's share price, click:

The restructuring marks a major setback for Chief Executive Howard Stringer, who had seemed to have the electronics and entertainment conglomerate back on track after implementing a wide-ranging restructuring after taking the helm in 2005.

Like rivals Samsung, Panasonic and just about every other big consumer goods firm, Sony faces a bleak Christmas shopping season as the financial crisis grows into a broad recession that has already engulfed the United States, parts of Europe and its home market in Japan.

YEN HURTS TOO

Sony, along with other Japanese manufacturers, has also been hit hard by a surging yen, with the currency's rise to 13 year highs this year cutting into the value of its earnings and making its products less competitive in overseas markets.

The maker of Bravia flat TVs and PlayStation 3 video game consoles, said in October when it more than halved its annual operating profit forecast that it would need to close some plants, reduce capital spending and lay off workers.

Hiroaki Osakabe, fund manager at Chibagin Asset Management, said the restructuring was unlikely to trigger a share rally.

"The scheme doesn't contain anything new, like a new earnings pillar or a growth strategy. It was something that people had expected, and I think the market had already discounted the announcement," he said.

Sony said it would delay plans to boost output for liquid crystal display TVs in Slovakia, outsource production of image sensor semiconductors, and reduce the number of manufacturing sites by about 10 percent from the current 57.

It aims to cut investment in its electronics business by 30 percent in the next business year to March 2010 compared with a previous business plan.
(Additional reporting by Junko Fujita and Aiko Hayashi; Editing by Rodney Joyce)

“It's a recession when your neighbor loses his job; it's a depression when you lose yours."