Sony Shares Hit by Restructuring Plan Announcement

It looks like Sony's attempts to boost profitability, announced just yesterday, have already started to show initial results and they’re not the best of kind, as the consumer electronics giant has recorded today a share drop of over 3 percent. The falling shares are believed to be the result of the recent announcement, as it has failed to impress investors skeptical of the company's capability to turn around its operations amid weak electronics sales.

 

As we reported in one of our previous articles, on Tuesday, Sony announced that it planned to cut approximately 16,000 jobs, to lower investment and pull out of some business, in an attempt to save the company $1.1 billion a year. The announcement came to confirm what most were already expecting, namely that the global economics crisis ravaged demand for the company's electronics products.

 

However, despite sustained efforts to demonstrate its capability to stay ahead of the predicted financial problems, shares of the company went down by 3 percent, earlier today, as analysts voiced concerns that the presented steps wouldn’t be enough to counteract the effects of the low economy. “Our first impression was somewhat negative, as this is not a major restructuring which will fundamentally change the business model,” Credit Suisse analyst Koya Tabata said.

 

The share fall on Wednesday underlines skepticism as regards the company's power to boost its sales in this year-end shopping season, which has already been affected by the highly mediated economic downturn.

 

“There are many uncertainties for Sony's short-term earnings, and we could not picture Sony's earnings recovery from yesterday's announcement,” said JPMorgan analyst Yoshiharu Izumi.

 

Back in late October, the consumer electronics giant also saw a major income drop in its 2nd quarter results. When the company announced the Q2 figures, an income decrease of as much as 71.8 percent was noticeable in the released numbers.