Japan's Big Electronic Manufacturers Register Record Financial Losses

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Japanese electronic manufacturers need to revisit their production and customer strategies to remain competitive, industry analysts say. (Image: Stock.xchng)
Japanese electronic manufacturers need to revisit their production and customer strategies to remain competitive, industry analysts say. (Image: Stock.xchng)

FINANCE

  • Panasonic could see losses of more than $9.2 billion
  • Sharp’s facing losses of $3.8 billion
  • Sony may lose upwards of $3 billion

Japanese electronics giants Panasonic, Sharp and Sony are all racing toward record loses for the fiscal year ending in March.

Losses can be attributed to competition from foreign rivals, especially South Korean-based Samsung Electronics, as well as weak demand for the trio’s televisions. The yen reached its highest post World War II value in October 2011, and the strength of the currency is eroding away at the profit of Japanese exporters.

Mitsuo Shimizu, an analyst for Cosmo Securities Co, told Business Week: “Japanese electronics makers must make a drastic change, as they have lost competitiveness against global rivals.” Shimizu also said the companies need to shift more production overseas and target niche customers.

Panasonic released a media report saying it will likely face a net annual loss of more than $9.2 billion. This figure is much higher than the $39 million predicted by Bloomberg analysts.

This marks the worst loss Panasonic has recorded since it was founded in 1918.

Panasonic purchased Sanyo Electric Co. last year, which is also underperforming. Sanyo was forecast to have profit of $1.6 billion, but has only recorded $392 million.

In response to the losses, Panasonic President Fumio Ohtsubo plans to cut 17,000 jobs by April, shift output overseas and turn the company into a leader of rechargeable batteries and solar panels. At a January electronics show in Las Vegas, Ohtsubo said the company has no plans of ceasing TV production.

Sharp, Sony Also Losing Money

Sharp, meanwhile, is predicting losses of more than $3.8 billion. Like Panasonic, Sharp is experiencing the largest loss since its founding in 1912. The company had formerly predicted a profit of $78 million, but has dropped more than 16% on the Tokyo Stock Exchange; its lowest level since 1980.

Predictions for revenue were cut by 8.9%, and there will be no operating profit.

Sharp’s losses can be attributed to slumping prices for its Aquos televisions, the economic slowdown and a Japanese-tax charge.

Sony Chief Financial Officer Masaru Kato told reporters he expects the company to lose up to $39 million, which is higher than previously predicted.

Key Statistics - Global Consumer Electronics in Japan (source: MarketLine)

  • By 2014, it is predicted that worldwide the consumer electronics market will be valued at nearly $290 billion. This represents an increase of 14% over 2009.
  • The largest segment of the global consumer electronics market is audio visual equipment, which accounts for 92% of the market's total value.
  • More than 47% of the global consumer electronics market value comes from the Americas.

By Melina Druga for
Melina Druga is an American writer and editor. She is the author of Enterprising Women: Practical Advice for First Time Entrepreneurs.

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