Sony to cut 16,000 jobs as profits fall by 60%

Media giant Sony will slash 8000 full-time jobs and pull back investments to save $US1.1 billion a year in an effort to shield itself from the global economic downturn.

Media giant Sony will slash 8000 full-time jobs and pull back investments to save $US1.1 billion a year in an effort to shield itself from the global economic downturn.

The cuts will solely affect those working in the electronics sector. Sony also plans to shut down plants and cut a further 8000 temporary workers, but a country-by-country breakdown of the plans has not been announced.

The group will reduce electronics investment by 30%, adjust production lines and lower inventories. It will also postpone production of LCD televisions in Europe due to a lack of demand, and cut its manufacturing sites by 10%.

“These initiatives are in response to the sudden and rapid changes in the global economic environment,” the group said in a statement. The cost savings measures should be in place by March 2010.

Senior vice president Naofumi Hara says the plans are being made to protect the group from the global financial crisis. “Now we are all facing a recession together. It is impossible to predict how much longer the situation will last.”

The announcements come as Sony has reduced its earnings projections. It is now expecting a 59% drop in profit to ¥150 billion for the fiscal year ending March 2009.

But Hara says it is unclear whether further revisions are needed. Sony’s profit for the July to September period dropped 72% compared to 12 months earlier.

Sony’s shares rose 3.9% following the announcement.

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