Sony, Panasonic Fall to 30-Year Lows as TV Losses Mount
Sony Corp. and Panasonic Corp. (6752), Japan’s biggest consumer-electronics makers, fell to their lowest levels in three decades yesterday after forecasting earnings that missed estimates because of a failure to end losses from TVs.
Sony, the world’s No. 3 TV maker, slid to the lowest since August 1980. The maker of Walkman music players and Bravia TVs closed with a market value of $17.5 billion, compared with more than $100 billion in 2000. Panasonic, the world’s largest maker of plasma TVs, dropped to the lowest since January 1978, according to data compiled by Bloomberg.
The declines came after the companies said losses from their TV businesses will continue, and as investors remained skeptical about predictions for returning to profit this year. Without hit products like the compact-disc player of the 1980s, Sony (6758) and Panasonic have lost ground to Samsung Electronics Co. (005930) and LG Electronics Inc. in TVs and to Apple Inc. (AAPL)’s iPod.
“The Japanese companies need to develop unique and No. 1 products to propel growth in the future,” said Yuuki Sakurai, chief executive officer at Tokyo-based Fukoku Capital Management Inc., which manages $7.3 billion of assets. “At this point, I don’t see any company in Japan that can do that.”
Panasonic, eliminating about 17,000 jobs after posting a record 772 billion-yen ($9.7 billion) loss last year, said yesterday it expects net income will probably be 50 billion yen in the 12 months ending March 31. The projection missed the 106 billion-yen average of 18 analyst estimates compiled by Bloomberg.
TV sales this year will drop 11 percent to 15.5 million units, while losses will continue for a fifth consecutive year, Panasonic said yesterday.
The company’s earnings targets “could be difficult to achieve, given restructuring costs and sluggish TV demand,” Yasuo Nakane, a Tokyo-based analyst at Deutsche Bank AG, said before the announcement. “Targets should be realistic.”
Osaka-based Panasonic made “excessive” investments in plasma and liquid-crystal-display TVs, President Fumio Ohtsubo told reporters yesterday. “We regret the decision we made.”
Sony said May 10 that TV sales will decline 11 percent to 17.5 million units and will lead to an 80 billion yen loss in the year that began last month. After four consecutive years of losses, the company said it expects to post a net income of 30 billion yen in the year to March 31, lagging behind analyst estimates for a 61.4 billion-yen profit.
Tokyo-based Sony is eliminating 10,000 jobs, or about 6 percent of its workforce, as part of its restructuring.
Sony fell 6.4 percent to 1,135 yen. The stock has declined 18 percent this year, extending the 53 percent drop last year. Panasonic dropped 1.6 percent to 570 yen, giving the company a market valuation of $17.5 billion, compared with Sony’s $14.3 billion.
By comparison, Suwon, South Korea-based Samsung, the world’s biggest maker of phones, chips and TVs, has gained 23 percent this year and is valued at $167 billion. Cupertino, California-based Apple, with a market capitalization of $530 billion, has jumped 40 percent in New York trading this year.
‘Investors Won’t Buy’
“Investors won’t buy stocks of companies that they think has no future,” said Yoshihiro Okumura, who helps manage the equivalent of $365 million at Chiba-Gin Asset Management Co. in Tokyo. “Sony and Panasonic have not been able to show how their TV businesses will recover.”
Global TV shipments last year fell for the first time in six years because of excessive inventory in the U.S. and Europe, and the end of Japanese government subsidies for purchases, according to DisplaySearch, part of NPD Group. Shipments fell 0.3 percent to 247.7 million units, the researcher said.
Both Panasonic, the maker of Lumix cameras, and Sony, whose businesses include films, insurance, music and game consoles, have changed their leadership.
Panasonic is promoting Kazuhiro Tsuga, its 55-year-old chief of audiovisual products, to replace Ohtsubo, 66.
Kazuo Hirai, 51, took over as Sony’s president and chief executive officer last month, replacing Howard Stringer. Sony also is introducing new game consoles, phones and tablets.
“It’s just hard for any Japanese consumer electronics maker to be profitable just by restructuring,” Sakurai said.
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