Pundits have been saying that things needed to change at Sony (NYSE:SNE), and today those folks got their wish. Already, though, there are grumblings that the latest proposals don't go far enough. The electronics and entertainment conglomerate's new CEO, Howard Stringer, should be commended for taking a stab at mending the giant's woes, but real solutions are likely to require more drastic steps.
Sony announced that it will slash 10,000 workers from its payroll worldwide, close 11 manufacturing plants, and eliminate or reduce 15 unprofitable electronics units. "Wow, 10,000 workers, 11 plants, and 15 units -- that's big!" you might say. But when one considers that Sony's global workforce amounts to 150,000 employees and that the company had 913 subsidiaries and 56 affiliates as of March 15, well, the changes don't look so grand. Back when Stringer was head of Sony's U.S. operations, he cut 9,000 workers in the United States alone.
Still, this latest move has to be put in context. Stringer is now the head of the Japanese giant, not just a regional chief. Given the more conservative Japanese business culture, the current changes may be all that he can manage, especially since he's dealing with the sacred core electronics business. Not surprisingly, the cuts will hurt in the near term, as the company now expects to report a loss for this fiscal year of $90 million versus a prior forecast of a $90 million profit.
The latest medicine, though, seems to fall short of what is needed to restore Sony's preeminence. Apple's (NASDAQ:AAPL) snazzy iPod continues to dominate digital music, though Sony is reportedly making strides in winning back leadership in Japan. In the video game console arena, the Japanese titan faces fierce competition from Microsoft's (NASDAQ:MSFT) Xbox and Nintendo's latest innovations. Finally, in the critical LCD television segment, Sony's strategy to take market share and increase profitability seems to have some serious flaws.
Competing in these cutthroat segments will require a united and focused Sony; that's exactly Stringer is striving to achieve. But given the breadth of Sony's products and services and the fragmented nature of its operations, the current restructuring seems too meager to be much help.
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Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.
