Sony (NYSE:SNE) has announced plans to eliminate 20,000 jobs, while an SEC filing shows that Coca-Cola (NYSE:KO) will cut another 900, adding fuel to the argument that any economic recovery we're seeing is a jobless recovery thus far.
Sony is cutting 13% of its workforce in a three-year revival effort to turn itself around. Its profitability level has collapsed to 4%, well below its aim of 10%, as competition from the likes of Matsushita's Panasonic has eaten its lunch. An employer of 154,000, Sony was losing money two years ago before returning to profits recently, but it wants to streamline staff and slash its number of suppliers by about a third to save $3 billion.
The New York Times reports that a journalist in the Japanese press corps asked Sony's CEO of six years, Nobuyuki Idei, if he should step down. He replied, "...Compared to two years ago, [our] performance is actually improving. I am sorry you had to ask that question, which is incomprehensible to me."
Mr. Idei, it means: Should you be one of the 20,000 let go? Oh, you knew what it meant.
Sony has lost market share as its Wega TV and Vaio personal computer have stalled (never heard of them?), while PlayStation2 is losing share to newcomers, and the once-revolutionary Walkman is being attacked by Apple's (NASDAQ:AAPL) iPod.
Sony's turnaround plan includes 7,000 job cuts in Japan and a new emphasis in China -- by focusing on consumer sales in that enormous country and moving some manufacturing there to lower costs. Additionally, the company announced a $2 billion alliance with Samsung to produce flat-panel TVs. Dell (NASDAQ:DELL) recently entered the market as a formidable contender.
The consumer electronics market evolves rapidly, competition grows, and prices decline, so Sony's turnaround faces great challenges and will not likely resolve quickly. Stalling in a fast-moving industry makes it that much harder to land on your feet and lead the race.
At least Coca-Cola's industry is slower-paced and Coke remains the dominant player. On top of 1,900 jobs slated for termination early this year, the beverage giant will cut another 900 workers from bottling plants, mostly in Asia. No further cuts are planned in Atlanta. Coca-Cola employs 57,000, but only 11,000 of those are in the United States. Most its focus remains international.
