Sony Struggling

From the NY Times:

Sony Plans to Lay Off 20,000
By JAMES BROOKE

Published: October 28, 2003


OKYO, Oct. 28 - In a bid to turn around the world's second largest
electronic company, Sony Corp. executives announced today a three-year
revival plan that includes cutting 20,000 workers, or 13 percent of the
payroll, ending television production in Japan, radically slashing the
numbers of parts and suppliers, and starting a flat screen production
joint venture with its main foreign rival, Samsung Electronics.

The plan is designed to save $3 billion over the next three years,
boosting Sony's profitability to 10 percent, from a forecast 4 percent
this year.



The turn-around plan comes as Japan's once premiere electronics brand
struggles with the aftermath of last April's Sony shock. Lower than
expected earnings sent its stock plunging, helping to pull Tokyo's
Nikkei 225 index to a two-decade low. Although the Nikkei later
recovered, Sony's shares have fallen 22 percent this year, making it the
third-worst performer on the index. Before today's announcement, Sony's
stock closed at 3,960 yen, about 89 percent off its lifetime high of
33,900 yen in March 2000.

In contrast, Matsu****a Electric Industrial Co., the world's largest
consumer electronics company by sales, has seen its stock increase by 16
percent, propelled largely by its Panasonic brand.

At today's press conference, audible murmuring rippled through the
Japanese press corps when a foreign reporter asked Nobuyuki Idei, Sony's
chairman for the last six years, if he should step down.

"Sony is not in the red ink, and compared with two years ago, this
performance is actually improving," retorted Mr. Idei, his jaw set.
Before turning off his microphone with a defiant click, he added: "I am
sorry you had to ask that question, which is incomprehensible to me."

Originally famous in the United States for such hits as the Walkman,
Sony has not been able to ride the new, fast-paced electronics market
with its Vaio personal computer and Wega TV. The company now heads into
the crucial Christmas season with sales slipping for its once enormously
popular PlayStation2 video game consoles.

As the news press conference, Sony officials preferred to talk about the
turnaround plan that had emerged from their annual October strategy
review session.

Sketching out a new worldwide division of labor, Kunitake Ando, the
company's president, unveiled a map where Japan was labeled E and C for
Engineering and Customers, China and South East Asia were marked C and M
for Manufacturing, and Europe and the United States were marked C.

No jobs are to be cut in China, which is to become Sony's main
manufacturing center in Asia.

Under this strategy, Sony is to end production by March of cathode ray
tubes in Japan. Production lines for these central components of
traditional television is to be cut from 17 today to 5 in 2006.

In general, Sony plans to shift production of cheaper mass-market goods
to China. Japan would be the company's advance technology base, making
such high added-value goods as semiconductors. Of Sony's job cuts, 7,000
are to be in Japan, largely in manufacturing.

Sony has also targeted China as a major consumer market, setting a goal
of $4 billion in sales by 2005. Mr. Idei described sales in China as
"explosive."

Looking to a fast growing segment of the television market, Sony also
announced a $2 billion joint venture with Samsung, to produce liquid
crystal displays, commonly known as flat panel screens. With Samsung,
the world's second-largest producer of flat screens, production would
start in South Korea in 2005.

With South Korean companies emerging as major rivals to Sony,
third-quarter profits at Samsung grew by 6.6 percent. At LG Electronics,
they jumped by 93 percent. By contrast, Sony announced last week that
its July to September profits were down by 25 percent.

Much of Sony's projected $3 billion savings over the next three years is
to be squeezed from the groups electronics division, its largest unit.
To reduce costs of materials, the number of suppliers is to be cut from
4,700 today to 1,000 by March 2006. To promote standardization, the
number of components is to be cut over the same time to 100,000, from
840,000 today.

As of last March, Sony had 154,500 direct employees, excluding its
finance sector.

In another area, Sony announced plans to form a holding company that
will include Sony Life Insurance Co, Sony Assurance Inc. and Sony Bank.
The new corporate structure will allow the companies to share products,
marketing and other resources.

But the core of the company remains the engineers. Today, Sony
executives unveiled a plan to bring together engineers from its home and
mobile electronics sectors to beef up design of computer chips and such
devices as as cell phones, mobile devices, TV's and video-game consoles.

One recent ground-breaking product from Sony laboratories is a digital
video recorder called PSX that allows users to store photos and videos
and play games.

"We hope to be able to offer new businesses that take advantage of
Sony's unique combination of electronics and entertainment," Mr. Idei
promised today.

"Ann Meffert" wrote in message
...
From the NY Times:

Sony Plans to Lay Off 20,000
By JAMES BROOKE

Published: October 28, 2003

SONY is now paying for its disastrous move into the US entertainment
industry in buying up Columbia studios, CBS records etc... just in paying
off one of the executives involved in a lawsuit regarding the buyout cost
them 600 million dollars! But as usual in today's 'GW world' the people
making these shocking business decisions are untouchable (it was Akio Morita
pet obsession) while the people copping it are the workers. SONY made in
China? Is the sky falling or what? Whatever happened to the samurai practice
of falling on your sword in disgrace? But then they'd have no US executives
left.

--
Italo