Sony cuts 16,000 jobs, fails to restore market confidence
Tokyo (AsiaNews/Agencies) - The market is skeptical about Sony's restructuring plan, and the company's shares lost 3% today on the Tokyo exchange. The Japanese economy contracted by 1.8% in the third quarter of 2008, much more than the expected 0.4%. The country is in decline for the second consecutive quarter, domestic consumption has fallen, and the gross domestic product is down by 0.5%.
Kiichi Murashima, an analyst for Nikko Citigroup in Tokyo, says it is the worst economic crisis since the second world war. "I think GDP will continue to contract until the second quarter of next year": there have been job losses, the yen has strengthened against the euro and the dollar, exports and investments are down, and the real estate market is also falling. Many small businesses are closing or going bankrupt, and large exporters like Tokyo and Sony are also in crisis.
Naofumi Hara, vice president of Sony Corp., the second largest electronics producer in the world, says that the fall in sales has been "much larger than we expected," with profits falling by about 59% from March of 2007 to March of 2008. The company's stock has fallen by about 70% in one year. In the period from July to September, the company lost 39.5 billion yen in the sector of electronic games, in spite of leading products like the PlayStation 3 console.
Now it wants to reduce production, close 10% of its factories, reduce investments (by 30% in the electronics sector), and cut 16,000 jobs by March of 2010, as part of a plan to reduce expenses by more than 100 billion yen (834 million euros) per year. 8,000 full-time employees will be fired, about 5% of the entire workforce in the electronics sector.
But the experts are skeptical, noting that the company has suffered serious losses because of its flat screen televisions, and saying that its entire strategy must be reconsidered. Analyst Katsuhiko Mori notes that "the number sounds big, but this staff reduction won't be enough. Sony doesn't have any core businesses that generate stable profits."