Sony Cuts 5% Staff, Japan Economy Shrinks

123jump.com Staff
09 Dec, 2008
New York City

Japan revised its quarterly economic decline to 1.8% from the previous estimate of 0.4%. Sony Corp plans to eliminate 5% of its worldwide staff and save 100 billion yen by the end of fiscal 2010. The company will also trim its invetsment and manufacturing in Europe.

[R]5:00AM New York, 7:00PM Tokyo - Japan’s economy shrinks 1.8% in the quarter to September. Sony plans to cut 5% of its global workforce.[/R]

Japan market averages rose marginally on optimism that the proposed stimulus package in the U.S. and India will help to forestall a deep global economic recession. Commodity stocks, shipping lines and realty stocks also rallied.

In Tokyo trading Nikkei 225 rose 0.8% or 66.82 to 8,395.87, and the broader Topix Index edged up 0.7% or 5.86 to 817.94.

In the first section of the Tokyo Stock Exchange 9.1 billion shares worth 662 billion yen traded and in the second section 170 million shares valued at 1.3 billion yen changed hands.

Of the Nikkei 225 index stocks 127 rose, 82 declined, and 16 were unchanged. Nomura Holdings led advancers in the index shares with a rise of 11.9%.

Japan’s Economy Contracts 1.8% in Q3

Japan’s Cabinet Office reported today that the country’s gross domestic product shrank by a revised 1.8% in the three months to September from an earlier projected decline of 0.4%. Economists had earlier estimated a 0.9% fall.

Private non-residential investment shed 2% from 1.7% reported earlier, while private residential investment eased to 3.9% from 4%.

Domestic demand also slid 0.3% from a gain 0.1%, while private demand eased to 0.3% from 0.1%.

The cabinet office also reported that private consumption remained unchanged at 0.3%.

Sony to cut 5% of its Global Workforce

Sony Corp reported today that the company will to establish a corporate structure that is designed to deliver cost savings of 100 billion yen by the end of the fiscal year ending March 31, 2010.

The electronics business has particularly borne the brunt of the deteriorating conditions on the global financial environment

Within the semiconductor business, Sony will slash investment expenditures by outsourcing a portion of its planned increase in manufacturing of CMOS image sensors for use in mobile phones to third parties.

The company also scrapped plans to invest in production expansion at the Nitra plant in Slovakia. Investment in the investment business will be lowered by 30% in the fiscal year through March 31, 2010.

Sony plans to stop production at the two manufacturing sites, including Sony Dax Technology Centre in France.

On the overall, Sony plans to reduce the total number of manufacturing sites by approximately 10% from the present total of 57 by March 31, 2010.

Headcount in the electronics business will be reduced by 8,000 out of the 160,000 as of September 30, 2008.

Gainers & Losers

Nomura Holdings led advancers in the Nikkei 225 index shares with a rise of 11.9% followed by increases in Tokyu Land Corp. of 10.9%, in Credit Saison Co. of 10.5%, in Nippon Sheet Glass of 10%, and Mitsui Fudosan of 9.3%.

Commodity stocks increased after crude oil prices 7.1% to $43.71 per barrel and copper futures for March delivery edged up 9.1%. Inpex gained 7.1% and Nippon Mining House soared 5.8%.

Other realty stocks also gained as well. Mitsubishi Estate Co. advanced 8% and Sumitomo Realty soared 7.3%.

Shipping lines increased after the Baltic Dry Index rose 1.2% yesterday. Mitsui OSK Lines jumped 6.2% and Nippon Yusen gained 6%.

Japan Tobacco led decliners in the Nikkei 225 index shares with a fall of 7.5% followed by losses in Astellas Pharmacies of 6.7%, in T & D Holdings of 5.5%, and Kao Corp. of 4.6%.