Sony share price up, to axe additional jobs at Xperia unit

Sony Corp. might be planning the reduce its workforce by another 1 000 staffers, employed in the companys struggling smartphone division, in line with its plan to return the unit to profitability.

Last October the Japanese electronics and entertainment company said it will part ways with 1 000 workers at its Xperia unit, which has around 7 100 employees. The cuts are in line with Sonys intentions to shift from the Chinese market to the US and Japan, where the company sees stronger demand for its high-end smartphones.

Sony plans additional cuts, focused on its operation in China and Europe, as efforts to accelerate the move to more profitable markets, a person with knowledge on the matter said on Wednesday.

The company is expected to announce the cuts on February 4, when the company is due to report its performance from the latest quarter. Overall the measures will see Sonys mobile division reduce its employees by around 30% to 5 100 as of March 2016, or the end of next financial year.

Sony had initially projected to sell 50 million smartphones during this financial year. However, in October the company said is now aiming at 41 million units, which is still better than the 39 million reported in the prior financial year.

The Xperia unit is expected to report an operating loss of about ¥200 billion for this fiscal year, with additional losses projected in the next one as well. However, Sonys has previously said it hopes to bring its mobile unit back to profitability in the financial 2016, helped by more restructuring measures.

Much like Sony, South Koreas Samsung is facing difficulties in its smartphone business, pressured by increased competition from Apple and low-cost Chinese companies. Earlier this month the technology giant stated its fifth straight quarter of profit declines from its mobile unit.

Meanwhile, Apple stated record smartphone sales of 74.5 million devices during the quarter ended December. The iPhone maker said it benefited from higher demand in China and its domestic and also biggest market, the US.

Overall, Sony Corp. expects to book a ¥40 billion operating loss for this financial year.

Sony Corp. gained 2.73% on Wednesday and closed at ¥2 824 in Tokyo, marking a one-year increase of 69.61%. The company is valued at ¥3.18 trillion.

According to the Financial Times, The 18 analysts offering 12-month price targets for Sony have a median target of ¥2 925, with a high estimate of ¥3 700 and a low estimate of ¥1 750.