Stringer says Sony will lose $1.7 billion
Global downturn putting the hurt on consumer electronicsTOKYO -- Citing what he termed "the worst crisis in my lifetime," Sony CEO Howard Stringer on Thursday forecast a net loss of 150 billion yen ($1.7 billion) and announced further restructuring of the company's ailing businesses at a hastily arranged Tokyo news conference.
As recently as Oct. 23, Sony had predicted net profits of the same magnitude, but the company has been battered by the global slowdown, while a strong yen -- it hit a 13-year high against the dollar Wednesday -- has only exacerbated matters.
Last month, Sony said it would cut 16,000 jobs, curb investment and pull out of some businesses to slash $1.1 billion in annual costs. On Thursday, the company confirmed that it plans to close one of its two domestic LCD TV factories, cut an additional 2,000 jobs and call for voluntary redundancies in its Japanese work force, moves aimed at saving 250 billion yen ($2.8 billion) annually. Stringer also announced an across-the-board slashing of management bonuses and reductions in basic salaries.
One Sony source in the U.S. said that the cost-reduction measures are being reviewed and implemented in the businesses beyond the electronics unit, but it wasn't immediately clear if and when the company would disclose them.
Stringer acknowledged that, while synergy between the electronics, entertainment and gaming divisions has improved, it still has a way to go. "Getting our three core businesses to work together is our biggest challenge," he said, adding that the current economic crisis could be the impetus for this to happen.
But he also alluded to management disagreements over the company's response to its woes. "We've tried hard to get everyone talking and working together in recent years but now is not the time for consensus management, it's time for top-down management," Stringer said.
As inventories pile up and prices tumble, Sony is feeling the pinch across its operations -- from semiconductors to movies and insurance. Analysts say the group, which generates two-thirds of its revenue outside Japan, needs to take more drastic steps.
"Sony has to consider ways to lower fixed costs not only for its TV business but for the whole company," Nomura Securities senior analyst Eiichi Katayama said. "It will have to start cutting development costs in addition to production costs.""
Sony shares on the Tokyo Stock Exchange, which closed before the announcements, were down 2.6, compared with a rise of 1.9% on the Nikkei average.
Georg Szalai in New York and Reuters contributed to this report.