- Title: JAPAN: Government warns of Sony job cut impact
- Date: 10th December 2008
- Summary: TRUCK COMING OUT OF A SONY FACTORY EMPLOYEES AT SONY WORKING AT THE FACTORY EMPLOYEE OPERATING A MACHINE MACHINE MORE OF EMPLOYEES WORKING AT THE FACTORY SONY FLAG AND AEROPLANE FLYING BEHIND THE FLAG
- Embargoed: 25th December 2008 12:00
- Keywords:
- Location: Japan
- Country: Japan
- Topics: Domestic Politics
- Reuters ID: LVA9CIKQAOV90EKH1E8KNJ4VJXJ0
- Story Text: Japan warned on Wednesday (December 10) that the job cuts at Sony will have a severe social and economic impact.
Japan's Sony Corp said on Tuesday (December 9) it will cut 16,000 jobs, curb investment and pull out of businesses to save $1.1 billion U.S. dollars a year as the financial crisis ravages demand for its electronics products.
Japan's top government spokesman Takeo Kawamura said the cuts will have a big impact.
"These job cuts at various companies have been a managerial decision, but the latest cut by Sony is very abrupt so it's going to have a greater impact," Takeo Kawamura, top government spokesman, told reporters at a news conference held on Wednesday (December 10).
"These cuts may have been done for operational purposes, but companies should think about their social responsibilities since those that are being fired are going to have a very difficult time especially towards the end of this year," Kawamura added.
The job cuts are the biggest announced by an Asian firm so far in the crisis and underscore the challenges facing Sony, which has fallen behind Apple Inc's iPod in portable music and is losing money on flat-screen TVs.
Sony said it would cut 8,000 regular workers, or roughly 4 percent of its workforce of 185,800, and an equal number or more temporary and contract staff.
But analysts warned the measures may not be bold enough to streamline a sprawling empire that ranges from semiconductors to movies and insurance.
The cuts are also risky because they mean Sony will be investing less in future growth.
In Japan, shares in Sony fell over 3 percent on Wednesday morning after its restructuring plans failed to woo investors sceptical if they will be enough to turn around its operations amid weak electronics sales.
Sony, the maker of Bravia flat TVs and PlayStation 3 videogame consoles, flagged the need for restructuring in October when it more than halved its annual profit forecast, blaming slowing demand for its Bravia liquid crystal display TVs and Cyber-shot digital cameras and a firmer yen.
It also underlines the grim outlook for Sony and its rivals during the year-end shopping season and into next year as the financial crisis grows into a recession that has already engulfed the United States, parts of Europe and Japan.
Sony said it would detail the effect of the restructuring on earnings at its third-quarter results in January.
It has already warned that it may need to revise down its profit forecasts further due to yen strength.
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