Panasonic Falls to 37-Year Low on Wider Loss Target

Panasonic Corp. (6752), Japan’s second- largest TV maker, fell for a third day to the lowest level in 37 years after widening its loss estimate on restructuring costs and falling demand.

Panasonic fell 5.6 percent to 388 yen in Tokyo trading. That’s the lowest since February 1975, the year the Betamax video recorder was introduced. The stock has declined 41 percent this year, the ninth-largest drop among companies in Japan’s benchmark Nikkei 225 Stock Average. (NKY)

The company, founded in 1918, predicted a net loss of 765 billion yen ($9.5 billion) in the year ending March 31, scrapping its May projection of 50 billion yen in profit, it said Oct. 31. The forecast prompted Osaka-based Panasonic to say it won’t pay a dividend for the first time since 1950 because of an “urgent need” to improve its financial position.

“It’s difficult to see much hope,” said Amir Anvarzadeh, Singapore-based manager for Asia equity sales at BGC Partners Inc. (BGCP), “Panasonic has no notable edge in audio and video.”

The company had its credit rating cut two levels by Standard & Poor’s on Nov. 2. The long-term debt was rated BBB, down from A-, S&P said in a statement, citing “huge” losses and the outlook for a slow recovery at the maker of consumer electronics, solar panels and home appliances. The rating, which is the second-lowest investment grade, was assigned with a stable outlook.

Restructuring Charges

The bulk of Panasonic’s projected loss will come from 440 billion yen of restructuring expenses, which includes writedowns of goodwill on solar cells, lithium-ion batteries and mobile- phone operations, the company said in its earnings statement. Panasonic is also taking 412.5 billion yen in charges to write down deferred tax assets, it said.

Panasonic purchased a controlling stake in Sanyo Electric Co. in 2008 to accelerate its expansion into the solar-panel and battery businesses. Goodwill writedowns stemming from the purchase contributed to last year’s 772 billion-yen loss, the company said.

“Its purchase of Sanyo has proved disastrously timed, with the solar business imploding and automotive-battery prices likely to fall dramatically over the next few years as electric car sales fall very short of sales estimates,” Anvarzadeh said.

To contact the reporter on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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