Sony yesterday announced larger-than-expected job cuts of 20,000 as part of a long-awaited restructuring plan aimed at putting it firmly back on the offensive in the emerging world of networked consumer electronics.

The three-year plan increases optimism that Sony is finally taking the necessary steps to get its core consumer electronics business back on an expansionary track.

Some 7,000 of the job losses will be in Japan.

The group's lacklustre performance in its key sector had resulted in a sharp drop in operating profit margins to about 2.5 per cent. Concerns about Sony's growth prospects had led to a slump in its share price.

The programme includes measures designed to reduce costs and boost profitability, and those aimed at future growth.

The initiative will reduce fixed costs by 330 billion yen over three years.

This measure will allow the electronics and entertainment group to achieve its pledge to generate 10 per cent operating margins by March 2006.

This will stand even if sales in its electronics division remain flat, according to chief executive Mr Nobuyuki Idei.

The cuts include a 13 per cent reduction of its global workforce.

This amounts to 20,000 out of 154,500 (excluding financial services).

Previously, the company had been expected to cut up to 10 per cent of staff.

Sony will outsource more manufacturing of mature products.

It will consolidate its global sites to achieve a 30 per cent reduction in the number of production, distribution and service points.

The manufacturing of cathode-ray tube TVs - the Trinitron TVs which made Sony a pre-eminent consumer brand - will be reduced.

The number of registered parts Sony uses will be reduced to 100,000 from 840,000.

Supplier numbers will be reduced to 1,000 from 4,700.

Measures to support its future growth strategy include a greater focus on "growth products" - including flat panel TVs and DVD recorders.

There will also be greater integration of Sony's diverse electronics businesses.

The result will be more products that integrate consumer electronics and games technologies.