Panasonic Falls as U.S. Authorities Investigate Avionics Unitby
The company says it is in full cooperation with investigation
Panasonic also raises full-year profit and sales forecasts
Panasonic Corp. fell in Tokyo trading after the company said its in-flight entertainment and communications systems subsidiary is under investigation by U.S. authorities for allegedly breaking bribery and securities laws.
The shares fell as much as 2.7 percent to 1,137 yen on Friday, the biggest intraday drop in three months. Panasonic Avionics Corp. is being probed by the Department of Justice and the Securities and Exchange Commission for allegedly violating the Foreign Corrupt Practices Act. Osaka-based Panasonic said it’s cooperating with the agencies, and evaluating the potential financial impact of the probe.
The announcement of the probe mars an otherwise positive earnings release for Panasonic, which raised its full-year profit and revenue forecasts. The subsidiary is part of a corporate division that also makes mobile phones, projectors and surveillance cameras with a total of 33,000 employees. The segment had 751.5 billion yen ($6.7 billion) in sales in the nine months ended Dec. 31, or 14 percent of total revenue.
“Details are unclear, but we intend to monitor developments due to the likelihood of a financial penalty in the future,” Mika Nishimura, a Tokyo-based analyst at Credit Suisse Group AG wrote in a report.
Panasonic increased its net income outlook 8.3 percent to 130 billion yen for the period ending March 31, citing weaker yen. Operating income will total 265 billion yen on 7.35 trillion yen in sales, it said.