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Jan 21, 2009

Bose plans to cut about 1,000 jobs

The woes of Circuit City, the holiday shopping season, and the automotive industry are taking their toll on Framingham audio equipment maker Bose Corp., analysts said.

Battered by the slumping economy and setbacks in the consumer electronics business, Bose yesterday said it will cut about 1,000 jobs, roughly 10 percent of its global workforce.

The privately held company wouldn't say how many positions would be eliminated at its corporate headquarters overlooking the Massachusetts Turnpike or how many workers it employs there. Bose issued a statement saying it was "restructuring its operations in response to the decline of the global economy, and its impact on consumer spending."

It said the cutback would affect unspecified "select areas, including manufacturing." The company declined to provide further details or make an executive available to discuss its finances and restructuring plan.

Industry analysts said all consumer electronics manufacturers and retailers have been hurt by the deepening recession, which recently has pinched spending by affluent consumers - an important part of Bose's customer base - as well as low- and middle-income buyers. Circuit City, the second-largest US electronics chain and long one of Bose's top customers, is shutting down 567 stores nationwide, including 19 in Massachusetts.

"Bose's premium products have a pretty hefty price point - thousands of dollars for their top-of-the-line home theater systems," said former Bose retail director Doug Fleener, a retail consultant for the Lexington research firm Dynamic Experiences Group. "What you're seeing is that people are trading down. Maybe instead of buying the $3,000 audio system, people are going for the $1,500 system."

Ross Rubin, director of industry analysis at research firm NPD Group in New York, said Bose appears to be losing market share in the home theater category to lower-priced rivals such as Sony Corp., Panasonic Consumer Electronics, and Samsung Electronics.

Consumer electronics sales plunged 5.7 percent in the Thanksgiving to Christmas period last year from the 2007 holiday season, according to NPD figures. The data excluded cellphone and video game sales as well as sales at retailer Wal-Mart Stores Inc.

"It was a very challenging holiday season all around," Rubin maintained. "The home audio categories have been struggling across the board, but Bose got hit particularly hard in December."

Other consumer electronics companies have also felt the pain. Harman International, whose Harman Kardon audio systems compete with Bose, last week said that it would be shutting down an operation in Woodbury, N.Y. Circuit City, which had been a major channel for Bose audio products, filed for bankruptcy protection last year, and, unable to find a buyer, is now shutting its stores and liquidating its assets.

Analysts said Bose also appears to be facing pressures in its car stereo sales as the automotive industry falters. On the positive side, they said, sales at its own stores of proprietary products, such as Bose Wave radios and sound-muffling earphones, continue to be strong.

"We have been staffed for a growing economy, not a global recession," Bose said in its prepared statement. "As a global company, we are responding to these challenges." The statement said the company's job cuts would "help us prepare for the future, and preserve our focus on research, innovation, quality, and our customers."

The job cuts were likely a difficult move for Bose, an employee-friendly company, Fleener said. "This is a conservative company," he said. "They wouldn't make a move like this lightly."

Source : Boston
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