11.03.2003 12:00 PM
Sony to cut 20,000 jobs over three years; Partners with Samsung for flat panel TV business

As predicted, Sony Corporation-once Japan's premier electronics brand-is attempting a massive financial turnaround by laying off 20,000 global workers over the next three years. The manufacturer will also cut production of CRT-based TV sets in Japan, and move to make liquid crystal displays in partnership with its archrival, Samsung Electronics of South Korea.

The goal is to save $3 billion in annual operating costs by 2006, increasing Sony's profit margins to 10 percent, from a forecast four percent this year.

As part of the reorganization, Sony said it would integrate overlapping administrative and corporate jobs, including relocating a number of electronics and marketing personnel to the West Coast, from Park Ridge, N.J. Sony U.S. spokesman Rick Clancy said the move to the West Coast could result in a "few hundred" layoffs. Sony employs 22,000 people in the U.S.

Sony's moves are in reaction to last April's "Sony shock" that shook its standing in the world financial markets. Lower-than-expected earnings sent Sony stock plunging, helping to pull the Nikkei 225 index to a two-decade low. Although the Nikkei later recovered, Sony's shares have fallen 22 percent this year, making it the third-worst performer on the index.

In contrast, shares of the Matsushita Electric Industrial Company have risen 16 percent, propelled largely by the Panasonic brand.

In a New York Times report of last week's Sony news conference, it was said that audible murmuring rippled through the Japanese press corps when a foreign reporter asked Nobuyuki Idei, Sony's chairman for the last six years, if he should step down.

"Sony is not in red ink, and compared to two years ago, this performance is actually improving," Mr. Idei responded angrily. Before turning off his microphone with a defiant click, he added: "I am sorry you had to ask that question, which is incomprehensible to me."

Thirty years ago Sony re-invented-at the expense of American legend RCA-the professional video industry with its U-Matic and later Betacam video formats. Almost 25 years ago, the company achieved huge success in the U.S. with its Walkman, a portable tape player that changed the music listening habits of the world.



Sony and Samsung Electronics will work together to produce LCD monitors similar to Sony's LCD WEGA monitors. The KLV-23HR2 (pictured) displays vivid colors across the screen with 1280 x 768 pixel resolution and a WXGA LCD panel for remarkable clarity.

But in recent years Sony has not been as successful with its current Walkman music players, Vaio personal computers and Wega TV sets. The company now heads into the crucial Christmas season with sales soft for its once enormously popular PlayStation 2 video game consoles.

Sony said no jobs are to be cut in China, which is to become its main manufacturing center in Asia for cheaper mass market goods. By March, the company will end production of its cathode-ray TV tubes in Japan. Japan will become Sony's advance technology base, making such high-value-added goods as semiconductors. Of the job cuts, 7,000 are to be in Japan, largely in manufacturing.

Looking to the fastest-growing segment of the world television market, Sony entered a $2 billion joint venture with Samsung to produce liquid crystal displays. With production to start in South Korea in 2005, the 50-50 joint venture will wed Sony with Samsung.

Demand for flat-panel liquid crystal screens is expected to leap in coming years, from four million this year to 14 million in 2005 and to 30 million in 2007, the two companies estimated. The alliance of the two electronics giants to produce seventh-generation flat-panel screens should lead the way toward standardizing the global TV monitor format, the companies said.

For more information visit www.sony.com/professional.

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