Japanese electronics giant Sony announces huge job cuts

[Redfairen]

Source: Deutsche Welle

Japanese electronics heavyweight Sony has said it will have to slash thousands of jobs to adapt to new market realities and enhance profitability. It also announced it would stop developing and producing its Vaio PCs.

Plagued by a sluggish TV and PC business, Sony reported Thursday it would cut 5,000 jobs in the two divisions. It said the layoffs would be implemented by March 2015.

The company pointed to rising restructuring costs and massive problems in the mobile and home entertainment segments. It now forecast a net loss of 110 billion yen ($1.1 billion, 813 million euros) in its fiscal year ending in March. It had previously expected bottom-line earnings of 30 billion yen.

Sony confirmed media reports it would sell its Vaio PC division to Japan Industrial Partners, which will reportedly set up a separate company to take over operations while keeping the brand name alive.

Read more: http://m.dw.de/english/mobile.A-17411449-9097.html

[Veilex]

1. As a rule, anytime a corporation uses the terms: "new market realities" and "enhance profitability"

It means a lot of people are going to get fired because the corporation in unhappy that its profit margin isn't as high as it wants... and the remaining employees will be forced to work harder to compensate for lost personnel.

Not a fan of Sony's business practices.

[Pings]

3. Sony shows the PC business has become expendable

When IBM announced in 2004 it was selling its PC business, it sent shock waves around the industry. When HP announced in 2011 that it would do so, too, it was a surprise decision (and one that later was reversed).
But Wednesday night, when ailing Sony announced its own plans to sell its PC business to Japan Industrial Partners, the idea has become almost mundane.
Why so? Because the personal computer has ceased being the star attraction in people's computing lives. Now it's just one of a cast of characters, and that makes it expendable in Sony's calculations.

http://news.cnet.com/8301-1001_3-57618457-92/sony-shows-the-pc-business-has-become-expendable/

[psychopomp]

4. Sony, as well as the other big Japanese electronics firms, is in serious trouble

Stiff competition from Korea, Taiwan and China, misplaced management priorities and macroeconomic factors have cut deeply into profits. Unless drastic measures are taken, they risk total failure.

How Japan Lost Its Electronics Crown
http://online.wsj.com/news/articles/SB10000872396390444840104577551972061864692

[Dopers_Greed]

2. Not surprising

It's no secret that, other than the Playstation division, the company is doing miserable.

[Art_from_Ark]

6. A lot of that has to do with the strong yen

It's hard to be competitive as an exporter when your nation's currency is artificially high compared with other major currencies.

For example, in 2002, the yen was around 123 to the dollar. So if Sony were paying its average Japanese worker, say (for the sake of argument) 2460 yen per hour, that would have been the equivalent of US $20/hour then. But in 2012, the yen was trading at 80 per dollar, or even less. So even if Sony were still paying its average workers the 2002 rate of 2460 yen per hour, in US dollars that would have been around $30.75 per hour, an increase (in US dollar terms) of more than 50%.

[blkmusclmachine]

5. Drip, drip, drip, drip ...