Sony to cut 20,000 jobs

Sony has revealed plans to cut 20,000 jobs worldwide as part of a major three-year restructuring strategy to revive the fortunes of its struggling consumer electronics arm

That represents 13 per cent of its global workforce, and the first 7,000 jobs to go will be in Japan. No further details were given about where the other cuts will be made, but the announcement will be worrying for thousands of UK workers.

The cost of the restructuring is now put at 335bn yen (£1.8bn) – 10 per cent higher than previous predictions. Sony said the changes will help secure a consolidated operating profit margin of at least 10 per cent by the end of 2006.

Sony has battled against sliding profits after posting a shock loss for the first three months of this fiscal year because of poor sales of the Playstation 2 and its Trinitron TV sets.

Sony's consumer electronics arm has suffered the most, largely because of the falling demand for traditional TV sets. It is now pitching its hopes on flat-screen sets, where demand is predicted to rise to 32 million units in 2007, and announced a £1.2bn joint venture deal with South Korean rival Samsung.

Sony also said its financial services division will be split off into a separate company in 2004, with the possibility of it being floated.