Sony Corp. looks to be in big trouble as they’ve forecast a record $6.4 billion net loss for the year just ended. To make matters worse, the company will be cutting its global workforce by six percent. That will cast roughly 10,000 employees into unemployment as the Japanese company restructures to meet changing market conditions.
Sony, once a powerhouse, has fallen much in the same way most tech companies seem to tumble. They’ve sold two divisions and had to drastically gear down on television production plans.
Kazuo Hirai, the new chief executive at Sony, was installed in the beginning of April to help make the necessary moves to keep the corporation on a competitive playing field. Since 2005, Sony has been steadily slipping on the world stage. They’ve responded with several rounds of job cuts to help repair departments and divisions that have done little beyond reporting consistent losses on the balance sheet.
Half of the current cuts will result from deals Sony cut some time ago. Last month, the company sold a chemical subsidiary to the Development Bank of Canada. And last year, Sony dumped off production of some liquid crystal displays to a joint venture that included Hitachi and Toshiba. The good news about these cuts is that most people will keep their positions, but the shuffling of the deck enables Sony to ditch the workers from their payroll.
Other cuts will come from the beleaguered television department. Sony has been bleeding losses from that division for some time now, even after chopping its proposed production goals in half in November. The business has been in trouble for the past eight years, so lowering production targets and cutting jobs is really one of the only options the company has left.
As for the fiscal losses, Sony’s prediction is twice that of earlier forecasts and marks the fourth straight year of losses for the company. Part of the problem has been weak demand for its traditional television products and a business model that isn’t sustainable against gadget rivals like Apple. Whereas most people aren’t purchasing new televisions each year, many consumers have been replacing gadgets on a regular basis and, as such, are driving companies like Samsung and Apple to almost absurd levels of market success.
Sony isn’t the only company in the sector facing losses. Sharp, another Japanese television maker, recently expanded its loss predictions for the fiscal year ending March 31 to $4.7 billion. Panasonic, too, is forecasting losses.