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Sony forecasts first annual net loss in 14 years

(Agencies)
Updated: 2009-01-22 20:05

TOKYO -- Sony projected it would report its first annual net loss in 14 years Thursday, and Chief Executive Howard Stringer vowed to turn around the company with pay cuts, job reductions and trendier gadgets.

Sony Corp.'s new Bravia TV series are shown in Tokyo in this photo taken on Thursday, Aug. 28, 2008. Sony projected it would report its first annual net loss in 14 years Thursday. [Agencies]

"The massive economic upheaval being experienced across the globe is sparing no one in the consumer electronics world," Stringer said at a hastily called news conference at Sony's Tokyo headquarters after it announced the earnings revision.

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Battered by slumping sales and a strong yen, the Japanese electronics and entertainment company expects to sink into a 150 billion yen ($1.7 billion) net loss for the fiscal year through March, a reversal from 369.4 billion yen profit the previous year.

To cope with the slowdown, Sony Corp. said last month it would cut 8,000 of its 185,000 jobs around the world and shutter five or six plants, about 10 percent of its 57 factories. It would also trim 8,000 temporary workers who aren't included in the global work force tally.

But Stringer said those steps were not enough. Now Sony plans to cut another 1,000 temporary workers in Japan and close one of two domestic TV plants.

Sony will also offer early retirement packages to its regular, full-time workers in an effort to cut 30 percent of its personnel costs by March 2010. It did not elaborate or give a specific head count.

Stringer also said he and two other top executives, including President Ryoji Chubachi, will give up their entire bonus. Other executives and managers will see lower pay.

Stringer said Sony needed to be more aggressive in cutting costs by avoiding redundancies, streamline the supplier chain and anticipate the trends in Internet-linking gadgets like the interactive TV set.

"There is still a lot of the old Sony, and not enough of the new Sony," he said, acknowledging that Sony faces intense competition from growing rivals like Samsung Electronics, Apple Inc. and Microsoft Corp.

Stringer said he was aware of the relatively protective lifetime employment regulations in Japan for full-time workers, adding that the company would "tread very, very carefully." Major Japanese companies have relied on a temporary work force to adjust to production swings.

Sony, which makes the Walkman player and PlayStation 3 game machine, also lowered its sales forecast. It predicts fiscal year sales to decline 13 percent to 7.7 trillion yen. In October, it had expected 9 trillion yen in sales.

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