Sony's turnaround plan includes big cuts

Now Reading :

Sony's turnaround plan includes big cuts

Sony's turnaround plan includes big cuts
Text size Aa Aa

Less than two weeks into the job, Sony’s new boss Kazuo Hirai has revealed his strategy to revive the fortunes of the ailing consumer electronics giant.

At a briefing for journalists he said there will be a major push into smartphones, growth in games and cameras and he confirmed media reports that there will be 10,000 job cuts, that is six percent of its total workforce.

Hirai said: “For Sony’s revival and growth process, there will be painful choices and decisions that must be made, and we will be faced with executing these decisions. But without these, we will not be able to change Sony.”

The turn around plan includes big cost cuts in Sony’s TV business which has not made a profit in eight years. Hirai aims to cut fixed costs by 60 percent and operating costs by 30 percent over two years. Sony will offer fewer models.

It is also hoping for an alliance with other TV manufacturers to develop and built the next generation of flat screens.

Sony and Japan’s two other major TV makers, Sharp and Panasonic, have been battered by weak demand, fierce competition and a profit-sapping strong yen that threatens the viability of Japan’s once-mighty television industry.

Hirai, who previously revived the PlayStation video gaming unit, said he wanted to make Sony a leading player in mobile phones, which would be a “hub device” for the mobile business. He aims to treble revenue to over the next three business years.

Sony will also look to increase sales of cameras and other digital imaging devices by a third and raise revenue at the games division by around a fifth over three years.

Hirai’s plans did not impress investors. “I can’t make out a growth story here. It’s good they’ve announced numerical targets, but you can’t tell how they’re going to achieve them,” said Kikuchi Makoto, CEO of Myojo Asset Management.

“It doesn’t feel like an aggressive makeover,” said Tetsuro Ii, president of Commons Asset Management.