Sony Announces Restructuring, Confirms 10,000 Job Cuts

Not even two weeks after former PlayStation head Kazuo Hirai took the helm of Sony as CEO and President, the company now confirms previous rumors that 10,000 jobs will be cut -- its biggest labor reduction in years -- this fiscal year as a result of corporate restructuring and overall company turnaround. It will also take a one-time charge of 75 billion yen ($926 million) as restructuring costs in the fiscal year ending March 2013.

"I will definitely change Sony and revive it," Hirai boldly said at a press conference to announce the plan. "There is no time but now to change."

As previously reported, the new plan is to strengthen its three core businesses, or pillars: digital imaging, mobile products and gaming. Other key initiatives to the transformation include turning around its floundering TV business, expanding its business into emerging markets, creating new businesses and accelerating innovation, and realigning its business portfolio and optimizing resources.

By transforming its electronics business, Sony said it is targeting sales of 6 trillion yen and operating income margin of 5-percent in its electronics business, and sales of 8.5 trillion yen, operating income margin of more than 5-percent, and return on equity ("ROE") of 10-percent for the Sony Group overall, in the fiscal year ending March 31, 2015 ("FY14").

"Sony is positioning digital imaging, game and mobile as the three main focus areas of its electronics business and plans to concentrate investment and technology development resources in these areas," the company announced on Thursday. "By growing these three businesses, Sony aims to generate approximately 70-percent of total sales and 85-percent of operating income for the entire electronics business from these categories by FY14."

For its digital imaging arm, Sony plans to reinvest itself in development of image sensors, signal processing technologies, lenses and other key digital imaging technologies for both the consumer and broadcast/professional markets. These products will also be extended out into the security and medical fields to further expand Sony's scope of its digital imaging business. Sony will target total sales of 1.5 trillion yen and double-digit operating income margin from the consumer, professional and image sensor businesses by FY14.

On the gaming front, Sony will lean more on digital content like downloadable titles, thus reducing the costs of printing on physical media (which is a dying format anyway). Thanks to the still unreleased PlayStation Suite, this service will expand out to tablets and smartphones using the Android OS. For gamers this is a big plus, as it opens the multiplayer platform up to four form factors: console, Vita, tablet and smartphone. Sony will target game business sales of one trillion yen and operating income margin of 8% by FY14.

On the mobile front, Sony plans to "launch new mobile products and establish new business models." It's also cramming the R&D, design engineering, and sales and marketing operations of its smartphone business (Sony Mobile), Sony Tablet and VAIO businesses into this pillar. Technology from the other two pillars will also lend a hand such as the Sony Entertainment Network for a rich experience. Sony will target sales of 1.8 trillion yen in FY14 from the mobile business, and significant profitability improvement.

What's dropping from the big picture is Sony's heavy involvement in the HDTV sector. Sony plans to downsize this non-pillar arm to 40-percent by 2013, and instead focus on advancing the development and commercialization of next-generation display technologies such as OLED and Crystal LED Display as well as beef up its 4K portfolio. Sony is additionally taking steps to enhance the image and audio quality of its "BRAVIA" range of LCD televisions. The company will consider a wider range of strategies for its TV operations, including tie-ups with other companies, Hirai said in a press conference.

As previously reported, Sony is also focusing on expanding its business into emerging markets. Sony generated 1.8 trillion yen through sales of electronics products in emerging markets in FY11, and aims to increase this figure to 2.6 trillion yen in FY14. Sony will also aim for consumer AV/IT sales in emerging markets to represent 60-percent of total anticipated global sales of these products by FY14.

Also previously reported is Sony's investment in the medical electronics field. The company has already successfully launched a range of medical printers, monitors, cameras, recorders and other medical-use products, and will target sales of 50 billion yen in this market in FY14. But there are also plans to enter the market for medical equipment components, and the life science industry.

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    Top Comments
  • phych
    Here's what I don't understand:

    When average Joe worker doesn't do his job, he gets fired.
    When mister corporate exec doesn't do his job, he fires thousands of average Joe workers.
  • jeremysvilla
    So Sad, and so many people unemployed, the economic crisis has not yet expired
  • Other Comments
  • jeremysvilla
    So Sad, and so many people unemployed, the economic crisis has not yet expired
  • alexdh01
    thats a whole lotta jobs
  • phamhlam
    I am glad that Sony cut 10,000 jobs. Some business waits too long to make cuts to become lean and effective. Sony was on top once but they didn't adapt fast enough. Business main focus are to make money and make it effectively. You have to cut everywhere from bottom to top.