Sony Restructures, Slashes 10,000 Jobs

First, it was Microsoft. Now Sony has announced plans to restructure the company and cut 10,000 jobs. Sony executives made the announcement Thursday at a press conference in Tokyo, where they acknowledged past mistakes have cost the company both in profits and market share in several key businesses.

"We have made promises before, but we failed to execute them," Howard Stringer, Sony's CEO, admitted.

Sony has been taking hits from all sides, giving up much of its music business to rival Apple, and losing share in the high-definition television market to companies like Samsung. In the $1.8 billion restructuring, Sony hopes to reverse those trends.

The move will not come without financial cost; instead of a $90 million profit for the year, Sony would report the same amount as a loss. However, company executives seemed to believe in the end the move would pay a bigger dividend.

Sony will focus on three key areas of its business: electronics, games and entertainment. The company would abolish its current system of separate companies in its electronics division and instead would operate as "business groups." This is expected to make the entire organization more agile and response, Sony said in a statement.

By the second half of 2006, Sony expects a return to profitability in its television business, with HD products leading the way. "Sony is already the world's leading HD company and is uniquely well positioned to enjoy the forthcoming consumer transition to high-definition products," the company argued.

Blu-ray will also be a big are of focus for Sony in 2006. Sony also pointed to its strength in music and video as a way to drive the new DVD technology, as well as the UMD format used in the PlayStation Portable.

The changes also mean a loss of jobs. A total of 10,000 employees will get the axe - 4,000 in Japan and 6,000 overseas, spilt equally between administrative and non-administrative staff. "These reductions will help streamline our operations and enable us to operate more efficiently," Sony said.

Sony also hinted at a release date for the PlayStation 3, saying it expected to launch the new console in the spring.