The job cuts are the biggest announced by an Asian company so far in the crisis and underscore the challenges facing Sony, which has fallen behind Apple's iPod in portable music and is losing money on flat TVs.
Sony said it would cut 8000 regular workers, or roughly 4 per cent of its workforce of 185,800, and an equal number or more temporary and contract staff.
But analysts warned the measures may not be bold enough to streamline a sprawling empire that ranges from semiconductors to movies and insurance. The cuts are also risky because they mean Sony will be investing less in future growth.
"The number sounds big, but this staff reduction won't be enough. Sony doesn't have any core businesses that generate stable profits," said Katsuhiko Mori, a fund manager at Daiwa SB Investments.
"After the workforce reduction, the next thing we want to see is what is going to be the business that will drive the company."
Sony is not the only one suffering. Japanese rival Panasonic lowered its earnings forecasts last month while South Korea's Samsung Electronics said it would cut capital investment and warned of tough times.
Sony's US shares, which have fallen more than 60 per cent this year, rose 2 per cent to $US20.45 in early trading in New York. In Frankfurt, its shares rose 4.83 per cent to €16.07.
Sony flagged the need for restructuring in October when it more than halved its annual profit forecast, blaming slowing demand for its Bravia liquid crystal display TVs and Cyber-shot digital cameras and a firmer yen.
The restructuring is a setback for chief executive Howard Stringer, who had implemented a major make-over after taking the helm in 2005, and until recently seemed to have put the company on a recovery track.
It also underlines the grim outlook for Sony and its rivals during the year-end shopping season and into next year as the financial crisis grows into a recession that has already engulfed the United States, parts of Europe and Japan.
"The outlook for the global economy suggests that things would become tougher for Sony next year, and it cannot expect a recovery without these restructuring measures," said Fujio Ando, senior managing director at Chibagin Asset Management.
Currency impact
Sony, along with other Japanese exporters, has also been hit hard by a surging yen against the dollar and euro, which cuts into the value of its profits and makes its products less competitive in overseas markets.
Sony said it would raise prices on some electronics products in Europe in response to the weak euro.
The company, which employs about 186,000 people worldwide, said it would also cut 8000 seasonal and temporary workers.
It would detail the effect of the restructuring on earnings at its third-quarter results in January.
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