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Sony To Halve Suppliers In Cost Reduction Measures

As it restructures amid mounting losses, Sony Corp will cut the number of its suppliers from 2,500 to 1200 by March 2011 in an attempt to reduce 2.5 trillion yen ($26.6 billion) in costs.
As it restructures amid mounting losses, Sony Corp will cut the number of its suppliers in half -- to 1200 from the current 2,500 by March 2011, according to a report from Reuters. Purchasing more parts and materials from fewer suppliers will help the company reduce its current procurement costs, which reportedly total about 2.5 trillion yen ($26.6 billion). Sony is aggressively cost-cutting across all its businesses in the hopes of saving more than 300 billion yen ($3.16 billion). The company projects a record operating loss for the year, its first in 14 years. As with other Japanese companies, Sony is also suffering the impact of a strong yen, and according to Sony, despite the fact that analysts view the company's supplier reduction as a positive move its shares fell over 1 percent because of currency concerns. According to Reuters, Mizuho Investors Securities analyst Nobuo Kurahashi says that although operating streamlining moves like this don't "bear fruit immediately," the "quick pace" of Sony's restructuring is a good sign. Sony will also cut 16,000 jobs, and has suspended annual raises for its Japanese workers alongside reductions in bonus payments.

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