Sony Cuts 5,000 Jobs and Sells PC Unit

Sony Cuts 5,000 Jobs and Sells PC UnitSony Corp will slash 5,000 jobs, and cut down 100 billion yen ($988 million) a year from fixed costs, while separating its loss-making Personal Computer and Television units. The Japanese electronics group uncovered this shakeup plan on Thursday.

Kazuo Hirai, Chief Executive of the company, is hoping to improve a TV business, which has lost $7.8 billion over the years, by separating it to speed up decisions on future policy. The giant electronics group also came to a decision to sell its Vaio personal computer unit, effectively ending 17 years in that business. Sony expects to lose 110 billion yen ($1.1 billion) for the year closing March 31. The forecast was a sharp downgrade from its earlier estimate of 30 billion yen profit.

A drop in TV prices and increased competition and slowing global demand have hurt the profitability of the unit.  Also, a constant decline in worldwide PC sales, which have fallen for six quarters in a row, have hurt its PC unit.

The maker of Playstation game and Bravia TVs consoles will slash five thousand jobs—more than 3% of its global staff—because of the reshuffle, counting on saving 100 billion yen in annual fixed costs.

Kazuo Hirai, speaking to reporters in Tokyo, said spinning the Television unit off into a fully owned subsidiary did not mean a disposal is imminent. He said that they have absolutely no plan to sell off their TV business.

Things are now so bad that Moody’s, a ratings agency, has stated that Sony is no longer worthy of an investment-grade credit rating. Last month, the agency downgraded this electronics group to junk status.

Having previously forecast a net turnover of 30 billion yen for this current business year, Sony is now heading for its fifth net loss within six years. The profit recorded in the year ended March 2013, Hirai’s first in charge, was helped by the sale of two landmark properties in New York and Tokyo.

Shakeup program 

By the end of next month, the PC unit that operates under the Vaio brand is expected to be vended to investment fund Japan Industrial Partners that will start an isolated company to take control of the operations. In the beginning, the PC unit will keep a 5% share in that business. By July 2014, the electronics group confirms that it will divide its TV division into a separate business.

The job cuts plan that will include its PC and TV units, are to be carried out worldwide by March 2015.

Focus on Smartphone

The electronics group has now decided to focus on making tablets and smartphones–two boosting sectors, which are evidently seeing vigorous growth. Already Sony has profited from this fastest growing market sector. Late last year, the popularity of smartphones increased its income astonishingly.

Of the five thousand recent job cuts declared, around one thousand and five hundred will be cut from Japan, and the rest will be implemented from its overseas operations.

This cut plan comes on top the ten thousand job losses Sony has declared over the previous year.

By Rahad Abir

Sources:

The New York Times
BBC
Reuters 

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