No further restructuring for Sony

Sony Corp. has denied reports that it is about to announce another corporate overhaul and closures of Japanese factories and major divisions.

The London Times newspaper suggested Jan. 5 that Sony, whose empire encompasses semiconductors, consumer electronics gear and movies, is braced for a series of "sacred-cow slaying" measures that would abolish some of its domestic operations and transform the electronic giant's business.

However, responding to the report, Sony spokesman Atsuo Omagari said, "We do not plan to announce additional restructuring measures at this time."

Sony announced a $1.1 billion savings plan in its electronics division in December, but analysts consider it needs further and bigger restructuring measures to secure growth.

The company revealed late December a series of drastic, cost-cutting measures, including a plan to slash about 8,000 jobs in its electronics business, or about 5 percent of its work force in the sector. A further 8,000 contracting jobs would also be axed.

Hit hard by the current and deep downturn, Sony also said it planned to curtail or delay part of its investment plans, and downsize or withdraw from unprofitable or non-core businesses.

It plans to reduce the total number of manufacturing sites by approximately 10 percent, from the current total of 57, by Mar. 31, 2010.

The Times report noted that Koya Tabata, a Credit Suisse analyst, recently warned investors that the restructuring of Sony is perilously overdue and must be radical. Sony management needs to make a rapid shift in its business model to one driven by earnings in the content business, he said.

The focus of research and development must be on software, he said, adding: "The most important thing is that, to improve organizational strength in the areas of development, purchasing and marketing, it will be necessary to further concentrate power in the hands of [Sir Howard] and unless this is achieved we believe [Sony] will be unable to close the gap with competitors such as Apple and Nintendo."

- John Walko
EE Times Europe