The faltering gobal ecomony has affected a pretty big target today—Sony [SNE] has announced a number of measures designed to "strengthen its corporate structure and bolster profitability across the Sony Group." Read: cut costs globally by ditching 8,000 permanent staff (5% of total staff), reducing headcount in seasonal and temporary staff, and reducing the number of manufacturing sites the Group uses.
The moves signal that consumer spending on electronics during the current global economic down-tick is markedly down, and not enough to keep Sony zipping along profitably. While pretty formulaic, the moves are designed to save "100 billion yen by the end of the fiscal year ending March 31, 2010," equivalent to $1.1 billion, and come on top of short-term measures like inventory management that Sony's already been following.
An indication of quite how far the downturn has impacted the company can be seen in two other changes announced at the same time—the company plans to "downsize or withdraw from unprofitable or non-core businesses" and "reduce investment in the electronics business". This latter reduction is by 30% by 2010, compared to the company's mid-term plan, and demonstrates that Sony is prepared to accept the long-term repercussions of adjustments like this in order to maintain stability at the moment.
Sony will outline the impact of these measures in its January 2009 third quarter earnings announcement.
And in what sounds like bad news for the consumer, the electronics giant is also planning to "adjust product pricing" which can only be in an upwards direction. The economic pinch is squeezing pretty hard.