Panasonic shares plunge 20% after huge loss forecast

Restructuring, writedowns spell shortfall amid TV sales doldrums


Shares in Panasonic Corp. dived nearly 20 percent Thursday after it warned of a mammoth ¥765 billion annual loss in the latest sign of trouble for the nation’s hard-hit electronics giants.

Panasonic shares closed 19.45 percent lower at ¥414 on the Tokyo Stock Exchange after it said late Wednesday that it would report the huge loss as it undergoes a major overhaul.

While Panasonic said it will achieve an operating profit, restructuring costs and writedowns will result in a ¥765 billion shortfall, close to its record ¥772.2 billion loss last fiscal year, one of the worst-ever for a Japanese firm.

The projection was a reversal of Panasonic’s earlier vow to return to the black by next March.

“The focus is on whether this is the end of restructuring-related losses,” Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management, told Dow Jones Newswires. “I think that is unlikely.”

Moody’s warned that it has put Panasonic’s credit rating on review for a possible downgrade after cutting its rating by two notches in September.

“The rating action reflects Moody’s increasing concern that sluggish demand and intense competition will continue to pressure Panasonic’s earnings and leverage,” it said in a statement Thursday.

Panasonic, like rivals Sony Corp. and Sharp Corp., has suffered in its television business amid falling prices and stiff overseas competition, while the strong yen has also hit manufacturers.

The television business has razor-thin profit margins and Japanese firms have been unable to keep pace with competition from the likes of Apple and Samsung, which have set the pace in the lucrative global smartphone market.

Samsung, by contrast, posted a record third-quarter profit of nearly $6 billion, powered by strong sales of its Galaxy smartphones and display panels.

Panasonic has announced a major restructuring of its liquid crystal display manufacturing division and is reportedly considering shifting all of its mobile phone handset production overseas because of high costs at home.

The global economic slowdown and last year’s quake-tsunami disasters have added to the woes of companies facing a progressively worsening situation in recent years.

Weak demand in Europe, a key market for everything from televisions and mobile phones to vehicles and electronics parts, has also dented balance sheets.