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By Sachi Izumi
TOKYO, Dec 10 (Reuters) - Sony Corp's $1.1 billion savings plan for its electronics division is not enough and further restructuring is needed, analysts said, even as its shares edged up 1.1 percent in a broad rally of Japanese stocks. The maker of Bravia flat TVs and PlayStation 3 video game consoles said on Tuesday it will cut 16,000 jobs, curb investment and pull out of some businesses to slash $1.1 billion in annual costs as a spreading global recession ravages demand for its electronics products.
But analysts said further steps were needed for a sprawling Sony empire that ranges from semiconductors to movies and insurance and has fallen behind Apple Inc's iPod in portable music and is losing money on flat TVs. "My impression was that Sony would need more restructuring steps, and yesterday's announcement was the minimum requirement," Deutsche Securities analyst Yasuo Nakane said. "The plan is still fuzzy on details."
Sony shares dropped more than 3 percent in their first trading in Tokyo after the restructuring announcement but turned around as a tentative deal to rescue U.S. automakers boosted Asian stocks.
But Sony's rise lagged a 4 percent gain for electronics rival Sharp Corp and a 3.2 percent gain for Tokyo's benchmark Nikkei share average.
Shares in Sony have plunged nearly 70 percent this year, underperforming a 43 percent fall for the Nikkei, a slide that has forced Sony to seek funds to repay debt convertible bonds that will mature this month.
Sony plans to raise more than 50 billion yen ($541 million) in bonds, an unnamed company official said, because its shares have fallen well below the conversion price.
The company sold 250 billion yen of convertible bonds in 2003 and set the conversion price at 5,605 yen, nearly three times Wednesday's close of 1,917 yen.
Investors may be more cautious to buy Sony's bonds, however, after Moody's Investors Services changed its outlook on Sony's debt to "stable" from "positive" on Wednesday.
GRIM EARNINGS OUTLOOK
Sony's fluctuating shares, after gains in New York and Frankfurt, underlined fears for the firm's earnings in the face of a surging yen and slowing economies around the world that are hurting sales in the critical year-end shopping season.
The yen, which hit 13-year highs in October cuts into the value of profits for Japanese firms such as Sony and Panasonic Corp and makes their products less competitive in overseas markets.
"There are many uncertainties for Sony's short-term earnings, and we could not picture Sony's earnings recovery from yesterday's announcement," said JPMorgan analyst Yoshiharu Izumi.
"Sony will have to address plans one more time that cover all of its operations, including the finance and game divisions."
He said investors were disappointed that Sony's plans did not specifically focus on its struggling TV operations.
The restructuring is a setback for Chief Executive Howard Stringer, who implemented a major restructuring after taking the helm in 2005 and until recently seemed to have put the company on a recovery track.
The planned cut in investment could hurt Sony when the economy and demand for electronics recover, some said.
"The restructuring symbolises a typical U.S. management style that focuses on a short-term profit, and Sony could come up with that quickly because it has a foreign president," said a fund manager, who declined to be named.
"I would not say all of Japanese-style managements are good, but I don't see an appeal in those companies that cannot take steps to tackle the current downturn as well as future recovery in demand."
Sony flagged the need for restructuring in October when it more than halved its annual profit forecast, blaming slowing demand for its Bravia liquid crystal display TVs and Cyber-shot digital cameras and a firmer yen.
It now sees an operating profit of 200 billion yen ($2.2 billion) in the year to March, but Reuters Estimates show the average forecast from 14 analysts is for a one-third lower profit of 121 billion yen.
For the business year starting next April, 13 analysts see Sony's operating profit of 161 billion yen.
Sony said it aims to cut costs by 100 billion yen by the end of March 2010 by slashing 8,000 regular workers, or roughly 4 percent of its work force of 185,800, and at least an equal number of temporary and contract staff.
It also aims to cut electronics investment by 30 percent next business year by delaying an output hike and outsource production, while it will also cut some manufacturing sites. ($1=92.38 Yen) (Additional reporting by Junko Fujita and Fumiya Mizuho; Editing by Rodney Joyce)