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Sony plans reorganization
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March 8, 1999: 8:44 p.m. ET
Company to restructure business to focus on core units, 17,000 jobs cut
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NEW YORK (CNNfn) - Sony Corp. said it plans to cut 17,000 jobs and convert three subsidiaries into wholly-owned companies in a broad restructuring of the world's second-largest consumer electronics company.
In a statement from Sony's headquarters in Tokyo, the company said it will turn Sony Music Entertainment (Japan) Inc. and two other units into wholly owned subsidiaries.
Sony Computer Entertainment Inc., maker of Sony's popular PlayStation video game machines and currently owned jointly bySony Corp. and Sony Music, will also become a full subsidiary.
Sony aims to boost competitiveness
Sony President Nobuyuki Idei said the moves would improve the overall competitiveness of the company.
"With the ongoing evolution in digital network technology, the three pillars of Sony Group -- electronics, entertainment and insurance and finance -- are facing rapid changes," he said. "Over the next three years Sony will invest aggressively in (research and development) capital equipment and facilities so that our electronics business, which is our core business, can evolve to best meet the needs of a network-centric world."
Sony said it would position three in-house electronics companies -- Home Network Co., Personal IT Network Co. and Core Technology & Network Co. -- as well as Sony Computer as the core units of its electronics business.
Investors reacted favorably to the announcement, pushing Sony's shares as high as 11,050 yen, up 1,000 from Monday's close. The shares were bid-only at the opening.
Industry watchers had expected Sony to announce an overhaul of its company structure, currently divided into 10 groups, to adjust to tough market conditions. Sony said it will form wholly owned companies from the three subsidiaries by January 1, 2000.
Sony also said it would reduce its group work force by about 10 percent by the end of the year to March 31, 2003. Sony group companies currently employ 170,000 people.
Idei will become president of Sony Computer Entertainment Inc. (SCE) effective April 1.
Under terms of the restructuring, Sony Music shareholders will receive 0.835 of a Sony share for each Sony Music share they own. Sony Precision shareholders will receive 0.203 of a Sony share and Sony Chemicals holders will get 0.565 of a Sony share. 
-- from staff and wires
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Sony
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