Here’s Why Sony is Cutting Jobs

In a statement released on Friday, Sony (NYSE:SNE) announced major cuts intended to accelerate the restructuring of its headquarters and electronics business operations in Japan.

Staff at the company’s headquarters will be cut by a fifth. A factory in Japan devoted to the manufacturing of camera lenses and mobile phones will be closed. A further 2,000 workers will be let go in Europe and 1,800 workers will leave the company along with the chemical business Sony sold to a state-run bank in Japan.

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Sony, the maker of PlayStation and Bravia televisions, expects the cuts to save 30 billion yen a year, or $378.6 million.

Earlier in the year, Sony announced plans to cut approximately 10,000 jobs in the fiscal year ending March 31, 2013, as the company works to stem losses in televisions and other consumer electronics.

“Sony CEO Kazuo Hirai, who took the helm in April, has pledged to revive the once-stellar brand by bolstering gaming, digital imaging and mobile devices as well as by nurturing new business such as medical devices,” reported Reuters.

However, shares have fallen by 42 percent since Hirai took office.

According to Seeking Alpha, the S&P’s decision to downgrade the company’s long-term debt rating to BBB, two levels above junk, should come as no surprise. The company was once able to leverage its brand to get a premium pricing for its electronics, but Apple (NASDAQ:AAPL), as the publication wrote in a recent article, is the only company able to sell computers for more than $1000 in the current market.

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