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Japanese electronics giants hit by big losses

Publication Date : 02-11-2012


Three of Japan's most visible consumer electronics giants are swimming in record losses amid a worldwide slump and stiff overseas competition, as they struggle to implement painful reforms for an early turnaround.

Sony, hit by falling demand for TVs, yesterday posted an unexpected seventh straight quarterly net loss of 15.5 billion yen for the July-September quarter, though this was better than the 27 billion yen loss it suffered a year earlier.

Analysts had predicted a 15.6 billion yen profit.

Still Sony, also known for its Vaio laptops and PlayStation game consoles, expects to see a profit of 20 billion yen for the full year ending March.

For Panasonic, it is now looking at a second straight year of huge losses despite predictions of an early recovery.

On Wednesday, it revised its earnings forecast for the year ending March from a profit of 50 billion yen to a massive loss of 765 billion yen.

Like Sony, Sharp yesterday posted a worse-than-expected loss of 249 billion yen for the quarter to September, compared with a 9.4 billion yen profit a year ago.

For the full year ending March, it expects a loss of 450 billion yen, almost double the shortfall projection in August.

The strong yen is not helping their exports, as is a Chinese boycott of Japanese goods sparked by a territorial dispute over a cluster of islets in the East China Sea.

Just a few years ago, Sony, Panasonic and Sharp stood for Japanese dominance in electronics, especially flat-panel TV technology.

Their once mainstay TV businesses have since been mauled by South Korea's Samsung Electronics, now the world's largest maker.

Sony sees a ninth straight year of losses from TV sales, while Panasonic's TV operation has been in the red for the past four years.

With digital content and applications now counting for more among Net-savvy consumers, Japanese smartphones, tablet computers and other digital devices have been no match against those from Apple and Samsung.

All three Japanese giants are desperately trying to get back into the black.

Sony's restructuring programme includes moving away from loss-making TV operations to smartphones, video games and medical equipment.

It also plans to cut 10,000 jobs, or about 6 per cent of its workforce.

Panasonic is eyeing a 5 per cent profit margin for all operations by fiscal year 2015, as it rushes to implement drastic reforms that include trimming its digital consumer electronics business and moving to less risky and more profitable fields such as home appliances.

It also plans to close TV assembly plants in Malaysia and the Czech Republic, and to halve the number of lithium ion battery plants in Japan from six to three.

In September, Sharp received a 360 billion yen syndicated bank loan.

In return, it has to cut more than 10,000 jobs, slash wages across the board, and sell off TV plants in China and Mexico as well as a United States solar power unit.

A hoped-for capital injection from Taiwan's Hon Hai Precision Industry has stalled.

Reports here said Sharp is now discussing tie-ups with US tech giants Apple, Google and Microsoft.

Analysts believe it is too early to tell whether the three Japanese giants will be able to make a comeback.

What all three lack, according to economist Hideo Kumano of Dai-ichi Life Research Institute, is a hit product that can put the brakes on their deteriorating earnings.

"I think it is not possible yet to predict what the future will be, not only for these three companies, but also for the entire electronics industry," he said.


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