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Sony plans to reverse losses to test CEO

SONY Corp said it will halve the number of parts suppliers to slash costs under a turnaround plan that's testing the mettle of Chief Executive Howard Stringer.

The Japanese electronics and entertainment company plans to cut purchasing costs by 500 billion yen (US$5.3 billion), or 20 percent of the 2.5 trillion yen spent during the fiscal year ended March, company spokeswoman Mami Imada said yesterday.

Sony, whose businesses span video games, camcorders and flat-panel TVs as well as movies and music, has been restructuring under Stringer, a Welsh-born American who became the first foreigner to head Sony in 2005.

But analysts say his true test starts now after he took on the additional role of president in February to speed up efforts to reshape Sony.

Sony sank to its first annual net loss in 14 years for the fiscal year ended March, losing 98.9 billion yen, battered by sliding global demand, a strong yen and declining gadget prices. It expects an even bigger loss this year.

Koya Tabata, an analyst with Credit Suisse in Tokyo, said Stringer has perhaps another year and a half to turn things around before his position becomes untenable.

Sony needs to pursue low-end, high volume business and improve inventory control to boost earnings from electronics as well as expand its distribution network to refine profit from games, he said.

"However, the company has yet to present a clear strategy," Tabata said.



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