Big Job Cuts on the Horizon for Sony

By Steve Anderson April 09, 2012

Sony's recent economic history reads more like a tragedy, with four consecutive years of annual losses and a PR black eye from a string of recent hackings. And the tragedy only gets deeper as word emerges that Sony's planning to cut fully 10,000 jobs from its payroll in a bid to recover.

The total cuts amount to six percent of the company's entire workforce, and fully half the cuts will come as a result of reorganizations in businesses that make chemicals and panels in both small and medium sizes. Part of a series of what new CEO Kazuo Hirai called “painful” steps, the move follows not only the annual losses and the PR impact, but also a recent downgrade by the Moody's Investors Service and Standard & Poor's.

What's worse is that the cuts are only considered a “temporary fix” by analysts like Mitsuo Shimizu at the Cosmo Securities Co. in Tokyo. While the job cuts will yield necessary cash for Sony, it won't address the larger issues Sony faces like problems in their television business, losses caused by exiting a panel deal with Samsung and the comparatively low rank its PS3 gaming console holds in the market, at least in terms of hardware sales.

More external problems like the strong yen and production difficulties caused by the flood in Thailand are also significant impacts on Sony's bottom line. Some have even described Sony as being in “a perpetual state of turnaround”, and this isn't far from the truth.

Sony does indeed have a lot of ground to cover before it can return to profitability company-wide. It has plenty of solid properties to work with, but it will be a question of these properties being used to their fullest--and hopefully, new ones being found--before Hirai can lead a struggling Sony out of its string of losses.

Since word has already begun circulating about the launch of the next-generation PlayStation system--with E3 just under three months away this is no surprise--bringing that out may give Sony the necessary punch it needs to recover from its dizzying string of losses. But with the world economy still best described as soft, new game systems may not headline everyone's priority list.

Edited by Jennifer Russell

Contributing TechZone360 Writer

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