Losses Force Panasonic to Project Worst Year in a Decade

By Ed Silverstein October 31, 2011

Panasonic is predicting a $5.3 billion net loss during the current year – which is reported to be the worst year the company has seen in a decade.

Panasonic is blaming the losses on a “restructuring of its lossmaking television business,” The Financial Times reported.

“Many companies around the world have been moving into flat-panel manufacturing, and that has pushed down prices and prevented us from pressing our technological advantages,” company President Fumio Ohtsubo was quoted by The Financial Times on Monday.

Consumers are getting drawn away from Panasonic to cheaper products made in Taiwan and South Korea, according to news reports.

To help counter the situation, Panasonic plans to reduce the number of panels made by about half, The Financial Times adds. It also is cutting down the number of its employees.

In its analysis of the new projections, Reuters  explains that the rising price of the yen and lower demand from consumers in the United States and Europe have led to lower sales.

Chief Financial Officer Makoto Uenoyama explained that the company needs to “tackle” the “television and related semiconductor businesses” and "If we downsize these, our profits will be completely different.”

He put a spin on the projected losses when he described them as "the birth pangs of switching to a new strategy."

Panasonic has reduced projections for TV sales for the year to 19 million sets from 25 million, Reuters said.

Ohtsubo also made a pledge that "We are determined to make the TV business profitable in fiscal 2012,” TechZone360 reported.

Panasonic projected a loss of $1.34 billion for the July-September quarter, according to The Associated Press. During the previous quarter, Panasonic, like many companies in Japan, suffered from the massive earthquake and tsunami which hit the nation in March.

Panasonic is also trying to become a company with more environmentally friendly practices, according to a company statement, and has come up with a new organizational structure among senior managers.

The company will cut its workforce to fewer than 350,000 employees by the end of the current fiscal year, from around 360,000 employees as of Sept. 30, TechZone360 said.

In a related matter, Sony – which is facing similar problems to Panasonic – “will split its television business into three divisions to make operations more accountable as part of efforts to turn around the loss-making business,” Reuters adds.


Ed Silverstein is a TechZone360 contributor. To read more of his articles, please visit his columnist page.

Edited by Rich Steeves

TechZone360 Contributor

SHARE THIS ARTICLE
Related Articles

Bloomberg BETA: Models Are Key to Machine Intelligence

By: Paula Bernier    4/19/2018

James Cham, partner at seed fund Bloomberg BETA, was at Cisco Collaboration Summit today talking about the importance of models to the future of machi…

Read More

Get Smart About Influencer Attribution in a Blockchain World

By: Maurice Nagle    4/16/2018

The retail value chain is in for a blockchain-enabled overhaul, with smarter relationships, delivering enhanced transparency across an environment of …

Read More

Facebook Flip-Flopping on GDPR

By: Maurice Nagle    4/12/2018

With GDPR on the horizon, Zuckerberg in Congress testifying and Facebook users questioning loyalty, change is coming. What that change will look like,…

Read More

The Next Phase of Flash Storage and the Mid-Sized Business

By: Joanna Fanuko    4/11/2018

Organizations amass profuse amounts of data these days, ranging from website traffic metrics to online customer surveys. Collectively, AI, IoT and eve…

Read More

Satellite Imaging - Petabytes of Developer, Business Opportunities

By: Doug Mohney    4/11/2018

Hollywood has programmed society into believing satellite imaging as a magic, all-seeing tool, but the real trick is in analysis. Numerous firms are f…

Read More