Sony is to cut more than 16,000 permanent and part-time jobs from its worldwide electronics division and will raise prices for its products in the face of dwindling consumer spending.

The draconian restructuring, which will also involve Sony shedding an unspecified number of “unprofitable or noncore” divisions from its sprawling portfolio, is the biggest of its sort announced in Asia since the global financial crisis took hold.

However, it is expected to set the tone for similar moves by Sony’s domestic and regional rivals.

Citing an “acute downturn in the economic climate”, Sony acknowledged that it may also be forced to make equivalent cost cuts from its video games and movie businesses. It said that the situation was “under simultaneous review” and that an announcement would be made early next year.

Sony said that the severe currency conditions would force it to raise European prices for its electronics products in the immediate aftermath of the Christmas shopping season. The move will not affect its standard-bearing PlayStation 3 games console, but will push up prices of BluRay disc players and batter the competitiveness of core Sony products. “At this stage we cannot keep pace with the sudden change of currency and the strong yen,” a spokesman said.

Sony’s plight comes as the yen continues to rise against the US dollar, the euro and other currencies crucial for Japanese exporters. To the surprise of markets, and despite the agony the yen’s appreciation is causing Japan Inc, Tokyo has avoided intervening to weaken the currency. Sony said that it had made representations to the Government explaining the financial pain that it was suffering as the yen lurches towards Y90 against the dollar.

The Sony lay-offs, which despite their suddenness and severity were attacked by some analysts as “too little, too late”, will involve the 5 per cent reductions in permanent staff being completed by 2010. Short-term contract workers and other nonstaff positions will be wound down over a similar 18-month period. About 10 per cent of the company’s 57 manufacturing sites will be closed entirely in the restructuring, with an overall reduction in new investment in electronics of 30 per cent.

The job cuts will be felt throughout Sony’s worldwide electronics empire and are part of an attempt by Sir Howard Stringer, the company’s president, to save about Y100 billion by the end of the next financial year. It is the British-born chief executive’s second big round of restructuring: he undertook a similarly fierce programme of job cuts and business realignments after taking Sony’s helm in 2005.

An analyst at KBC Securities said that, under Sir Howard’s leadership, Sony had got rid of the “stupid stuff” that had accumulated within the company over the years – robotic dog divisions, chocolate and gift emporia and other legacy follies. That leaves fewer obvious targets for a cull, he said, and may lead to fundamental parts of Sony’s electronics supply chain being outsourced.

Shortly after Sony’s announcement, Panasonic, its largest domestic rival, hit investors with an even bigger forecast downgrade.

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