Sony confirms it will axe another 1,100 employees in mobile unit

Sony confirmed it will cut another 1,100 employees from its Mobile Communications business, on top of the 1,000 job cuts it had already announced in that unit. The company, which disclosed the job cuts in conjunction with its quarterly earnings report, will prune the mobile division down to 5,000 employees by March 2016, a 28 percent cut to a unit that Sony CEO Kazuo Hirai said in the past would be a key element of the company's electronics business.

Overall, Sony said on Wednesday preliminary results showed its operating profit doubled to $1.52 billion (¥178.3 billion) in its fiscal third quarter, which ended on Dec. 31. The company said sales rose 6 percent to around $21.76 billion. That was well ahead of the operating profit of $821 million on sales of $20.23 billion expected by analysts, according to Thomson Reuters data.

Sony said sales in its mobile business jumped 29 percent year-over-year to around $3.64 billion. The united eked out an operating profit of around $79 million in the quarter, but Sony has said the mobile business is expected to post a loss of around $1.82 billion for the full fiscal year.

In a statement, Sony said its mobile business grew sales primarily due to an increase in smartphone unit sales, an improvement in its product mix and the favorable impact of foreign exchange rates. Smartphone unit sales increased to 11.9 million from 10.7 million in the year-ago period.

After repeatedly cutting its smartphone sales forecast for the fiscal year that ends in March, Sony now says that it expects to sell 39.2 million total smartphones in the fiscal year, basically flat from last year. Sony is counting on fewer sales in the Asia-Pacific region, likely a nod to intense competition in China. Sony had initially said in April 2014 it expected 50 million smartphone sales.

Sony CFO Kenichiro Yoshida said the company is ending the development of new smartphones for China and is cutting back on the number of new Xperia models Sony releases as the company struggles to compete with Apple (NASDAQ: AAPL) and Samsung Electronics at the high end of the market, where Sony has been focusing since 2012.

For more:
- see this release (PDF)
- see this presentation (PDF)
- see this Bloomberg article
- see this Reuters article
- see this CNET article

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