Sony cuts 100 jobs at U.S. PlayStation headquarters
By Colleen Taylor, Contributing Editor -- EDN, June 7, 2007
Reeling from the financial results released last month that reflected a $1.9 billion (232.3 billion Japanese yen) annual loss in its game division, Japan-based electronics giant Sony Corp. has laid off about 100 employees at its United States PlayStation operations.
The layoffs were carried out Thursday at Sony Computer Entertainment of America's (SCEA) Foster City, Calif. headquarters. The job cuts amounted to about 6 percent of the operations' 1,600-person workforce.
"In an effort to accurately align the company to meet the changing needs of our consumers and of our industry, Sony Computer Entertainment America has found it necessary to analyze our current business and to restructure the company as necessary to continue our standing as the market leader," SCEA Spokesman Dave Karraker said Thursday in a statement to gaming Web site Kotaku. "These restructuring efforts are currently under way and do include the streamlining of our operations and other initiatives to further strengthen the business, reduce costs and increase operational efficiency."
Karraker was not immediately available for further comment on the job cuts.
The layoffs were not without warning. In the annual report Sony released last month, the company said that its electronics segment would "continue to implement programs to reduce headcount by streamlining business operations, including closure and consolidation of manufacturing sites, as well as headquarters and administrative functions."
Sony is apparently suffering from losses it takes with the manufacturing of its super-high-tech PlayStation 3 console, which launched in November. Indeed, the $1.9 billion in losses was recorded despite the gaming segment's whopping $8.37 billion in annual sales for the year ended March 31. Meanwhile, Sony's rival Nintendo is basking in profits it has received from its relatively simpler Wii console, which hit shelves in November, as the company has posted $2.19 million in profits on $7.9 million sales for the fiscal year ended March 31.
According to market research firm NPD Group, the Wii outsold Sony's PS3 4-to-1 in April, selling 360,000 Wii consoles in the United States compared to Sony's sale of 82,000 PS3s. Nintendo's success might have to do with the Wii's affordability: the Wii console costs about $250, while the PS3 starts at $500. Also, Nintendo markets its console as "games for the masses," while the PS3's graphics-heavy experience targets a more niche market of intense gamers.
