Sony slashes 8,000 jobs to bolster bottom line

Associated Press • Dec 9, 2008 at 12:00 AM

TOKYO (AP) — Sony is slashing 8,000 jobs, or 4 percent of its global work force, aiming to cut costs by $1.1 billion a year as a global downturn and stronger yen batters profits at the Japanese electronics maker.

Sony Corp. , which has 185,000 employees worldwide, said Tuesday it will complete the layoffs by the end of March, 2010. It did not give a country breakdown for the job cuts but said they will come from its electronics business, which has 160,000 workers.

The company — maker of the Walkman portable player and PlayStation 3 game console — also has movie, video game and financial businesses.

Sony's announcement comes amid a slew of similar news from Japanese manufacturers, who face nose-diving demand at home and abroad. The electronics industry has been hurt by plunging gadget prices, currency fluctuations, intense competition and a global slowdown in consumer spending.

The company makes about 80 percent of its sales overseas and is vulnerable to a stronger yen, which erodes foreign earnings. The dollar has sunk to about 93 yen from 117 yen last year.

Sony has cut production and lowered inventories, but tough times demand more drastic efforts, it said in a statement.

The job cuts and other changes will deliver more than 100 billion yen ($1.1. billion) in cost savings a year by March 2010, according to Sony.

The cost-cutting plan includes postponing an investment to boost production of liquid crystal display TVs in Slovakia because of a plunge in European demand for flat-panel TVs.

"These initiatives are in response to the sudden and rapid changes in the global economic environment," Sony said.

Sony will end production at some plants, including one in France that makes tape and other recording media and will continue moving electronics production to lower-cost countries. Manufacturing sites will be reduced by about 10 percent from 57 today.

Sony will also trim spending in semiconductors, and will outsource a portion of the production it had planned for image sensors for mobile phones.

The cost of the job cuts and plant shutdowns will be disclosed next year when the company updates its forecast for the fiscal year, the company said.

Sony recently slashed its full-year earnings projection, citing weaker consumer demand and a stronger yen. For the fiscal year through March 2009, it is expecting a 150 billion yen ($1.5 billion) profit, down 59 percent from the previous year.

The yen's recent jump was set off by panicky international investors rushing to unwind yen "carry" trades, which had taken advantage of Japan's low interest rates to borrow yen to invest elsewhere. Reversing those trades means buying back the yen, lifting its value.

Sony's July-September profit plunged 72 percent from a year earlier to 20.8 billion ($224 million).

Sony shares rose 3.9 percent to 1,896 yen ($20). The announcement came shortly after trading ended in Tokyo.

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