Japan's Panasonic Corp forecast a record net annual loss yesterday, joining beleaguered rival Sony Corp in a sea of red ink, both struggling to fix their broken TV businesses and overcome criticism that they have lost their way.
Panasonic, posting quarterly results, said it was headed for a loss of 780 billion yen ($10.2 billion, Dh37.4 billion) for the year to March, dwarfing expectations for a loss of around $6.2 billion. The loss was almost entirely due to restructuring charges and writedowns, including to its Sanyo Electric unit.
Panasonic, which is in the process of shedding 17,000 jobs by end-March, also missed third-quarter market forecasts, diving to a loss of 197.6 billion yen from a profit a year earlier.
Its grim outlook follows forecasts by Sony and Sharp Corp for combined losses of $6.7 billion, highlighting the impact on Japanese consumer electronics firms of fierce competition from foreign rivals such as South Korea's Samsung Electronics, weak demand and a strong yen.
With TVs becoming smart — linked to other devices like tablets and smartphones — an inability to win in the TV market risks hobbling sales across their consumer electronics line-up.
"Panasonic, like Sharp and Sony, has structural problems," said Makoto Kikuchi, CEO of Myojo Asset Management in Tokyo, noting all three need to come to grips with problems in their TV businesses. Yet with a slump in market share overtaking that effort, it may need to spend more to squeeze a TV business it refuses to give up on to keep it viable.
Speaking at a consumer electronics conference last month, Panasonic President Fumio Ohtsubo dismissed the idea of ditching TVs, a unit that accounts for around 1 trillion yen in revenue. "At the core of our latest restructuring was to make our TV unit profitable," Ohtsubo told reporters in Las Vegas. "Panasonic's TVs may one day be a case study of a recovery," he added, citing an example of Japanese material companies that spent 50 years to develop successful carbon composites.