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Sony Cuts Jobs, Emphasizes PS3, Establishes Cell Dev Center

Sony Cuts Jobs, Emphasizes PS3, Establishes Cell Dev Center

September 22, 2005 | By David Jenkins, Simon Carless

September 22, 2005 | By David Jenkins, Simon Carless
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Officials from Sony Corp. have confirmed that the company is to cut around 10,000 jobs, close eleven plants and reduce or close fifteen unprofitable operations. The moves are a part of a major restructuring of the company, overseen by new chief executive Sir Howard Stringer, to reduce Sony’s global workforce by six percent.

As part of the announcement, Ryoji Chubachi, Sony's president and electronics CEO, made specific comments relating to Sony's video game holdings, in both the PlayStation 3 and PSP, commenting in particular of the costs related to designing the PlayStation 3: "Game-related investment has been wrapped up and we hope the game business will recoup the investment."

In addition, Sony's Stringer commented of the PlayStation 3, which is still scheduled to launch in Spring 2006: "We will galvanize groupwide resources like never before to ensure its success", and identified the PS3 as one of Sony's key 'champion products', alongside Walkman-related audio products and the company's new Bravia LCD televisions.

It was also revealed that a new division, the Cell Development Center, has been established, and Masa Chatani, CTO of Sony Computer Entertainment, has been appointed to head it. This division will supervise development of products and applications based around the Cell chip, as Sony looks to use its flagship technological invention, developed in association with IBM and Toshiba and to be deployed first in the PlayStation 3, in other consumer electronic devices such as televisions.

Sony's cuts came as the company announced it was revising its full year forecasts downwards from a profit of ¥10 billion ($90m) to a loss of ¥10 billion " which was largely attributed to the cost of restructuring, particularly in relation to CRT televisions and early retirement programs. The only unprofitable operations to be mentioned by name are the Aibo robot division, whose research costs will be reduced, and the cessation of new product development for the Qualia line of high-end televisions.

The overall restructuring plan is intended to cut costs by ¥200 billion ($1.8bn) by the end of March 2008, with 4,000 workers being lost in Japan and an additional 6,000 worldwide. Contrary to some speculation, no major spin-offs or sales were announced for any part of Sony's business.


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