Sony seen needing further rejig following job cuts
Sony's $1.1bn savings plan for its electronics division is not enough and further restructuring is needed, analysts said. The maker of Bravia flat TVs and PlayStation 3 video game consoles said on Tuesday it will cut 16,000 jobs, curb investment and pull out of some businesses to slash $1.1bn in annual costs as a spreading global recession ravages sales.
But analysts said further steps were needed for a sprawling Sony empire that ranges from semiconductors to movies and insurance, and has fallen behind Apple's iPod in portable music and is losing money on flat TVs. "My impression was that Sony would need more restructuring steps, and yesterday's announcement was the minimum requirement," said Deutsche Securities analyst Yasuo Nakane. "The plan is still fuzzy on details."
"There are many uncertainties for Sony's short-term earnings, and we could not picture Sony's earnings recovery from yesterday's announcement," said JPMorgan analyst Yoshiharu Izumi.
"Sony will have to address plans one more time that cover all of its operations, including the finance and game divisions."
He said investors were disappointed that Sony's plans did not specifically focus on its struggling TV operations.
The restructuring is a setback for chief executive Howard Stringer, who implemented a major restructuring after taking the helm in 2005 and until recently seemed to have put the company on a recovery track.
The planned cut in investment could hurt Sony when the economy and demand for electronics recover, some said.
"I would not say all Japanese-style managements are good, but I don't see an appeal in those companies that cannot take steps to tackle the current downturn as well as future recovery in demand."
Sony 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.