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Sony to Cut 8,000 Jobs
Sony has announced that it will cut 8000 jobs from its global workforce in an attempt to save the business £740 million.
The job cuts account for 5% of Sony’s total workforce – which today sits somewhere around 170,000 – and marks the biggest workforce cut by an Asian firm so far in the global economic downturn.
Sony is also preparing to reduce its volume of manufacturing sites by about 10%. The firm will now delay plans to boost output for LCD TVs in Slovakia and outsource production of image sensor semiconductors. In total, the company aims to cut investment in its electronics business by 30 percent.
These measures are expected to be completed by March 2010.
"These initiatives are in response to the sudden and rapid changes in the global economic environment,” the company said in a statement, drawing on a number of events which have unfolded in recent months.
In late October Sony cut its profits outlook by 57 percent, an announcement the electronics giant followed by reporting a 72 percent fall in profits for the second fiscal quarter. Shares in the company hit a sixteen-year-low as November turned, while the firm’s native country Japan fell into a recession in part due to its crumbling export market and surging Yen.
"Particularly within its electronics business, where Sony has been most affected by the acute downturn in the economic climate, the company has already undertaken certain short-term measures, including adjusting production, lowering inventory levels, and reducing operational expenses," the company said, adding that it “intends to adjust product pricing to mitigate the impact of the appreciation of the yen, curtail or delay part of its investment plans, and downsize or withdraw from unprofitable or non-core businesses."
"Furthermore, Sony plans to realign domestic and overseas manufacturing sites, reallocate its workforce and reduce headcount."
It is unknown if the firm's new changes will affect the PlayStation business, and if this will be a final measure from Sony during the economic crisis.
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Honestly this has really nothing to do with the Playstation brand and I seriously doubt it will in the long run either, The psp is doing VERY well the PS2 is doing well exspecially for how old it is and the PS3 is selling very well considering its price point . If you watch the news alot of large companies are having really hard times GM, FORD, this recession is hitting everyone hard and I fear its only gonna get worse I wouldnt be surprised if Microsoft and Nintendo start cutting back also just to save some money were gonna start hearing about alot of layoffs in the coming months. The point is the playstation brand is just fine and Im sure Sony overall will be fine also .
@gwsmokey - You are correct that the layoffs announced so far are for the electronics division, not the entertainment group PS3 is a part of. Unfortunately, this is only the first announced layoff and the entertainment group has publically stated that their division is now under review and further announcements may come soon.
Sony finds itself in quite a bind and this is the perfect storm (in the bad sense) for them. When you combine the global recession and unfavorable exchange rates with the massive hit they took on Cell and Blu-Ray development (which they had hoped would be offset by more at this stage) things are looking troubled right now. Of course, no company is immune at this point, but Sony gambled particularly high on the development of these costly technologies and the resultant delays in PS3 and Blu-Ray launches may really hurt them in the end, as consumers simply are less inclined to spend so much for emerging technologies as opposed to the values competing technologies offer. Launching a year earlier would have made a HUGE difference for them.
Sony is a giant and I personally think the gaming group will emerge relatively unscathed, but it remains quite possible that Sony may have no choice but to stick with the "10 year plan", because they can't justify the R&D for a new console before then (at least they can't afford what the shareholders will tolerate right now).
Nintendo finds itself in an enviable position with both the Wii and DS and can weather the recession just fine with its massive cash reserves. MS is also highly insulated from recession but have a history for acting shrewdly, so I wouldn't be surprised to see cost saving measures taken within their entertainment group (Zune/360) - further cuts in first party software, etc.
grognard66 "You are correct that the layoffs announced so far are for the electronics division, not the entertainment group PS3 is a part of. Unfortunately, this is only the first announced layoff and the entertainment group has publically stated that their division is now under review and further announcements may come soon."
...layoffs happened at SCEA as recently as last week, so we can all know for certain that the "entertainment group PS3 is a part of" has been affected.
And honestly I think that SCEA, SCEE, and SCEJ are all part of the Electronics division because they make the hardware for the PS3 as well as the software. I think the Entertainment Division is Sony Pictures Entertainment (Columbia Pictures, TriStar, MGM, Sony Classics). I know that Sony Online Entertainment was recently acquired by SCEA and in that acquisition, SOE moved from the Entertainment Division to the Electronics Division of Sony.
Couldnt agree with you more. You my friend got on the DIME or at least I share your view. That is why 10 year cycle is there... it has to be for some reason. Then again, I kind of dig it cause it gives me time to save up. The games coming out now are great, blu ray is there, VOD available, the PSN improved, features added, it really is so much more than what it was when it launched 2 years ago. Games look if not better in some cases than X360 so all in all its great. I just sometimes dont understand why people hate SONY so much and want them to FAIL so bad. Like they get satisfaction when they hear it. IMO i rather spend more time playing games then worring if my system is #3. Heck Nintendo has been in #3 for the Past 3 years, now its a change, so what? At least PS3 is here and now, enjoy it! There are 100's of great games on the SYSTEM now, and not to mention how many just got released for the past few months.
Let him be, Kim's just doing his work.
On topic, I simply knew someone would come up with this commentary sooner or later. It's funny how these things go - like clockwork.
The PS3 may not be doing as well in its lifecycle as the PS2 did at the same point in its lifecycle, but I wouldn't say it’s done terribly either. I don't have hard numbers but from what I've gathered reading about Japan and Europe's numbers is that the PS3 may have had better annual console sales worldwide than the 360 has. It may be close, but if worldwide console sales are any indication, the PS3 isn't doing all that bad. Now, US sales, yeah, the 360 has about a 2:1 advantage over the PS3 and has added to their (360's) lead every year. Being smashed in the largest market of the 3 definitely is bad, but again, worldwide they seem to be doing fine. MS has claimed as of late that they are now beating the PS3 in Europe overall, I have yet to see any evidence as it seems hard numbers from Europe aren't easy to come by, but I'm sure MS wouldn't flat out lie like that either. Maybe embellish, but not lie. MS has an 8 million console lead worldwide over the PS3 with about 6 million of that lead from the US alone, through process of elimination you can say that the 360 has sold 13 million units across the other two regions and the PS3 has sold 11 million units in the same two non-US regions in about a year's less time. Assuming the 360 had sold 3 million units across the two non-US regions by the time the PS3 came out that would mean the PS3 since its launch has outsold the 360 in those two regions only by 1 million units overall, not annually. That would be 500k units more a year between the Asian markets and Europe, nothing to brag about, but also not the worst thing either. If they can step up their US presence, things could be a lot better for them.
Oh, and for those of you who may say I'm vomiting sales numbers or whatever, I'm not. I'm using official NPD numbers and widely accepted worldwide sales figures released by MS and Sony (25 million 360 sales worldwide, 16.8 million PS3 sales worldwide).
http://vgsales.wikia.com/wiki/NPD_Seventh_generation
edit: This was meant as a reply to Kim not an attempt to bash Sony in any way (I actually stuck up for it...)
You keep on dumping in every sony post, and I dont know why... It does not even matter though! Now... lets see... Against the PS2 i think PS3 is right there where it was back when PS2 launched. The real thing is its a 400 dollar machine, the moment it drops to 350 or below, sales will jump again. Then when it reaches 200 dollars it will be a much better bang for the buck then the HDD less and accessoriess less X360 ARCADE. Now why do you have to mention an XBOX in every sony post also? heck with being $200 less, and 3 years on the market it better be selling more than PS3. So lets see, 17mill PS3 vs 24mill X360 with 24 months vs 38 months on the market... Tell me whats up with that? Only in the US 2:1 on that i can agree with you.
I was replying to Kim to stick up for Sony, I wasn't dumping. I just didn't press "reply" on accident.
I thought I was actually sticking up for them...guess not. My point was is that the PS3 isn't doing as bad as everyone says. I mentioned the 360 because that is Sony's direct and only competitor (the Wii is smashing everyone especially the PS3 so I opted not to mention Wii's numbers) so I was comparing numbers to show that the PS3 is actually doing just fine. That's not dumping bro. I didn't say "the PS3 is teh suxxors" at all.
And your numbers are wrong, 16.8 million PS3s, 25 million 360s, 24 months and 36 months respectively.
Just to further illustrate my initial point, as of last month’s worldwide numbers, 16.8 million PS3s in 24 months is 700k units exactly worldwide a month, 25 million 360s in 36 months is 694,444 units worldwide a month. So, again, the PS3 isn't doing as bad as everyone states. I'm not going to compare the Wii to the PS3/360, because as I said, that would embarrass 'em both.
Although that is good for Sony, they're not going to catch MS at the rate of 5,556 a month more sold worldwide than the 360 with an 8 million console deficit. There, I took an accurate dig at Sony just for you monkey.
What are you talking about? Sony has assets, plus we are talking about the SONY TV and Electronics divisions here, not the PS brand. There will be a PS4 when the time is right, beleive me... Sony is selling consoles on PSP, PS3, and PS2 ends... So what are you trying to say in your post? After all the whole world is in a recession and @ 400, 500 a pop its doing just fine!
Relax its just a beginning of a race. Its barley 2 years old...
Key Facts - "It is unknown if the firm's new changes will affect the PlayStation business, and if this will be a final measure from Sony during the economic crisis"
"Even japan is in a recession"
Edit: additional info FYI -
"MSNBC reports that Sony has 185,000 employees, and 8,000 will be layed off. For comparison, 8,000 employees is larger than the combined number of people at Sony and Nintendo working in the videogame sector; but it is only 4% of Sony’s total work force worldwide. Sony has said the cuts will come from its 160,000 electronics employees. The aim is to save $1.1 billion by March 31, 2010 with gradual layoffs between now and then
Sony blames the rapid deterioration of the economy for the cuts . Much of the problem comes from the fact that a dollar bought 117 Yen in 2007 while in 2008 a dollar buys only 93 Yen . One analyst noted that Sony’s real problem is its core industries are never consistently profitable , resulting in big losses in some divisions being roughly offset by big profit in others.
So far the restructuring does not appear to be hurting Sony's gaming division. However, with about $10 billion in debt Sony has to be very concerned about profiting which could prevent a PS3 price drop for quite some time.
Update:
The 8,000 employees are full time employees who will be laid off. However, an additional 8,000 seasonal workers and part time employees will laid off as well "
Reasons like this are why the rumors continued to grow saying that the Playstation 3 and PSP are Sony's last entries in the videogame market. Sony simply doesn't have the liquid (cash) assets necessary to launch a new home console. Plus, the poor performance of the Playstation 3 would seriously work against the launch of a future console from Sony.
I don't think Sony will pull out of the console race for 1 minute, and if they did it would be a very dark day for all of us. You may not be a fan of the PS3 but if it didn't exist the 360 would still cost pretty much the same as it's launch price. Healthy competition is always a good thing.
Good point. Competition between console manufacturers will always be good for us gamers.