Sony to layoff 16,000 employees, loses charm among consumers

Is Sony losing its charm?

The world’s second-biggest consumer electronics maker plans to eliminate 16,000 jobs — making it the largest reduction announced by a Japanese company since the credit crunch spurred a global recession, according to the Bloomberg wire.

According to the report, Sony will curb investments, outsource production and move away from unprofitable businesses by March 2010 to save more than 100 billion yen (approx. $1.1 billion) a year, the company said in a statement today.

The cuts include 8,000 full-time employees, or roughly 5 percent of the company’s electronics workforce, and another 8,000 part-time and seasonal workers, Sony said. The job reductions beyond full-time employees will affect subcontractors, seasonal workers and people hired on a daily, weekly or monthly basis, according to company spokeswoman Mami Imada. Temporary workers typically don’t get the same benefits Sony’s full-time workers receive, she said.

Such measures have been taken by Sony before: In 2005, when the company projected its first annual loss in more than a decade, Sony announced plans to eliminate 10,000 workers.

Sony said it may revise its profit targets as well, and that it will announce the financial effect of the measures in January when it reports fiscal third-quarter results.

ZDNet editor-in-chief Larry Dignan says the changes won’t really fix most of the company’s woes.

On Oct. 23, Sony said that net income will probably drop 59 percent in the year ending March 31, reducing the outlook by 38 percent as the stronger yen and slumping demand undermine sales of its electronics including Bravia televisions.

Sony faces no problem with cash flow, and plans to invest 30 percent less in its electronics business than planned under its mid-term strategy, without giving figures. It will also cut its 57 manufacturing sites by 10 percent by the end of next fiscal year, and postpone investment plans at its Nitra plant in Slovakia that assembles LCD televisions for the European market.

Andrew J. Nusca is an assistant editor for ZDNet.com. See his full profile anddisclosure of his industry affiliations.