Sony Japan to close factories and 'major divisions' - report

Company preparing for "sacred cow-slaying" as it takes drastic action to turn around business

Following the decision to cut 8000 jobs by 2010, Sony is set to take more drastic cost-cutting initiatives early next month, closing factories in Japan and abolishing a number of its major divisions.

That's according to a report by The Times, which claims the company will restructure its business with fundamental changes to the manufacturing process and a radical management upheaval.

The majority of changes are likely to be made at Sony Japan, with the report expecting a series of "sacred cow-slaying" moves by the company.

The Sony Group's main divisions include manufacturer Sony Electronics, television and film outfit Sony Pictures International, PlayStation department Sony Computer Entertainment, music label Sony BMG and insurance and banking division Sony Financial Holdings.

According to analysts, Sony needs to shift into the content business and away from manufacturing, and president Sir Howard Stringer must take complete control of the business and push out the old guard in management.

"The most important thing is that, to improve organisational strength in the areas of development, purchasing and marketing, it will be necessary to further concentrate power in the hands of [Sir Howard] and unless this is achieved we believe [Sony] will be unable to close the gap with competitors such as Apple and Nintendo," offered Koya Tabata, analyst at Credit Suisse.

Both Credit Suisse and Deutsche Bank have downgraded the company in recent weeks, with analysts warning Sony has reacted too slowly to its own business needs and the current economic climate.

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