Panasonic to Get Rid of Loss-making Businesses
The Wall Street Journal reports that Panasonic plans to cut losses in businesses such as semiconductors, mobile phones and television. It will push into new growth areas and wants to supply auto companies with rechargeable batteries and integrate green technologies into buildings.
Panasonic President Kazuhiro Tsuga unveiled a new three-year business plan on Thursday, saying that "The first thing we have to do under this business plan is get rid of the loss-making businesses, at the same time, we have to create a path that we can follow with conviction." Tsuga took over the role in June 2012 from former President and current Chairman Fumio Ohtsubo, who will retire as chairman in June. Ohtsubo was responsible for expanding Panasonic's TV expansion.
The Wall Street Journal goes into detail about how Panasonic made big bets in the early 2000s on TVs, which have backfired as sales slowed down in recent years. Panasonic estimates that the TV business incurred a loss of 86 billion yen for this fiscal year ending in March, less than the 210 billion yen it lost in the previous year. Even then, President Tsuga said that the company will stay in the TV business, and that "to get out would be the final resort, that possibility is not zero."
Ohtsubo was also responsible for the acquisition of Sanyo Electric; Panasonic paid 400 billion yen (US$4.5 billion) for a 50.2% stake in Sanyo in 2009, and acquired the remaining shares of Sanyo in 2010, when the news about the final acquisition broke it triggered a 26 percent rally in Sanyo shares while pushing down Panasonic's shares to a 16-month low. At the time, Panasonic planned to invest more aggressively in energy-related products like solar cells and batteries, and Sanyo was the world's leading manufacturer of the rechargeable batteries used in electronics and cars.
President Tusga said Chairman Ohtsubo decided to "leave of his own will", but The Business Times reports Panasonic as saying Ohtsubo is stepping down "to take responsibility for the recent struggling results".
Panasonic says that it will undergo a restructure, which will trim the current number of business units from 88 to 49. It is not the company's first restructure in recent years however, in 2011 Panasonic had already announced that it would streamline operations from five main lines to three, and cut about 17,000 jobs over the next two years. In late December, Panasonic agreed to sell a digital camera-making OEM business to a private-equity fund.
Like other Japanese companies, Panasonic has been facing difficulties stemming from the March 2011 earthquake and tsunami disaster, a weak global economy and until recently, a strong yen, as well as competition from Korean companies like Samsung and LG.