Sony To Undertake Massive Restructuring

(October 28, 2003) Tokyo, Japan--After seeing its shares on the Nikkei index fall by 22% this year, Sony Electronics has undertaken a massive restructuring of its operations under the moniker, "Transformation 60." The changes aim to clarify the company's operational structure as well as better position its technology and resources for growth. Under the plan, Sony will cut approximately 20,000 jobs over the next three years.

"Transformation 60," which was discussed at a meeting of Sony executives in Tokyo on Monday, aims to secure a consolidated operating profit margin of at least 10% by the end of fiscal year 2006. The company is implementing a two-pronged approach to this by 1) clarifying its operating structure and concentrating technology and resources for growth and 2) by making extensive reforms to its operational profit structure. A key change under the first part of this approach will be the convergence of the electronics business, which will include the development of convergence strategies in the home and mobile electronics sectors; a push for more technological advancement in the home electronics market; the creation of new markets through the convergence of electronics and game technology; the push to accelerate the move to HD; and the strengthening of the company's research and development divisions. In the second part of the approach, Sony will concentrate its engineering and development resources in such categories as flat panel TVs, home servers, and mobile devices.

It also plans to restructure its workforce, laying off about 20,000 of its approximately 154,500 global employees by 2006. About 7,000 job cuts will be made in Japan. As for cuts to Sony's professional broadcast division, Sony Electronics senior vice president of corporate communication Rick Clancy said "There is no indication [of that occurring] at all [thus far]."

Another result of the "Transformation 60" meeting was an agreement between Sony and Samsung to jointly manufacture a seventh-generation amorphous TFT LCD panel, a move which will likely propel worldwide adoption of this type of television set.

Sony Electronics