Sony Reports Massive Losses; May Announce 10,000-Employee Layoff

Published 3 years ago by , Updated April 10th, 2012 at 6:53 pm,

Sony 10,000 Employee Layoff Kaz

When Kaz Hirai was announced this February as the next President and CEO of Sony – the replacement to long-tenured boss Sir Howard Stringer – he promised to be a driver of growth. A turnaround CEO for a company that had seemingly lost its direction.

He also knew it wouldn’t be easy.

After lamenting over the “serious trouble” staring down the company and its bottom line, Hirai officially took over the reins of Sony last week on April 1st. Now, one of his first major initiatives as acting CEO is about to reverberate across the industry.

According to reports from several news publications, including the Nikkei business daily, Sony plans to slice about 10,000 jobs from its worldwide workforce in the upcoming fiscal year – a whopping 6% of their current labor strength.

A Sony spokesperson denied the Nikkei reports to the BBC, but Hirai is expected hold a press conference on Thursday where the layoffs will be announced as part of his overall restructuring plan. The consumer electronics giant produces a wide variety of products spanning the personal electronics industry; however, it’s still unclear as to which sectors the cuts will affect most.

If true (and the overwhelming inundation of reports would suggest so), the axing appears to be in the time-honored vein of scuttling costs to buoy profits. Sony reported a crippling loss earlier this year of 159 billion yen ($2.1 billion) for the October-December quarter, and today more than doubled its projected loss for the full fiscal year through March 2013 to 520 billion yen ($6.4 billion) – all of this after similarly abysmal losses for the second quarter of 2011.

Sony layoffs 10,000 Employees Losses

We certainly don’t wish financial troubles on anyone – the number of lives affected by the news will be far greater than 10,000 – but such repercussions were inevitable well before Hirai Era got underway.

Though it’s widely believed that paltry television sales are the major culprit behind Sony’s downturn, we’ve seen firsthand how the company has struggled with video games as well.  Going as far back as the PlayStation 3’s out-of-the-gate struggles; continuing on through its several consecutive years in the red; and arriving at the recent trials of the PlayStation Network, a fledgling Japanese Vita, and this week’s news of a slow-selling PS3’s price-cut; it’s easy to understand how the company has been battered over the years. Even Kevin Butler likely has to pay for Skittles out of the vending machine.

After yet another affirmation of Sony’s financial woes, an even greater challenge is presented for the pricing/releasing/marketing of the PlayStation 4 – which many believe will launch in 2013 or 2014. With the Wii U debuting this winter and a next-gen Xbox lurking in the wings, the company can ill-afford to make another “$599 US Dollars” mistake.

Ranters, Kaz Hirai was right to be flummoxed at first, but it’s clear that he’s decided on a realistic and frugal approach for the resurgence of the Sony empire. Will laying off 10,000 employees be conducive to long-term success? Do you see Sony rebounding in the next few years with a new PlayStation generation and additional overhauls to its technology business?

Follow me on Twitter @Brian_Sipple.

Sources: AP, Reuters

TAGS: PS3, PS4, Sony