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Glory days fade from memory at Japan’s ailing electronics firms

AFP-JIJI

Japan’s top electronics firms on Thursday reported mixed earnings, with Sony slashing its full-year profit outlook while hard-hit Panasonic turned in strong earnings and boosted its annual forecast.

The firms have undergone painful restructuring to stem years of losses as they struggle to keep up in the low-margin television business, while rivals, including Apple and South Korea’s Samsung, surge ahead in the lucrative smartphone sector.

Once world No. 1 Sony booked a net loss of ¥15.8 billion in the April-September term and cut its forecast for the whole year to March by 40 percent, blaming dwindling sales of digital cameras, personal computers and televisions.

However, that was still an improvement on the ¥40.1 billion loss in the same period last year.

The country’s digital camera makers have suffered as consumers increasingly turn to smartphones to snap pictures, while Sony also said its film business turned in a weaker-than-expected performance.

Company chief Kazuo Hirai has shrugged off pleas to abandon the television unit altogether, while the firm has also turned down a call by U.S. hedge fund boss Daniel Loeb to spin off 20 percent of its entertainment arm to boost profits.

In an interview with foreign media in October, Hirai reaffirmed his plan to keep the entertainment business within the vast conglomerate, calling it “a very vital and important part of Sony Group’s overall strategy.”

“It is one of the key pillars of our future growth,” he added.

The company is banking on strong holiday sales of its PlayStation 4 game console as rivals Nintendo and Microsoft also jockey for control of a sector worth $44 billion annually.

Panasonic, however, said dramatic corporate overhauls and a sharply weaker yen — which makes exporters’ goods cheaper overseas — were key factors in helping it crawl back from the abyss after several quarters of swinging losses.

The firm said it had swung back to profit for the six months to September and doubled its full-year forecast — after combined losses topping $15 billion in the past two fiscal years.

The company said it earned a ¥169.3 billion April-September net profit, reversing a net loss of ¥685.2 billion a year earlier. It also said it was on track to earn a ¥100 billion net profit in the year to March.

However, Koki Shiraishi, an analyst at SMBC Nikko Securities in Tokyo, warned: “The impact of a weak yen will start disappearing in the second half of the fiscal year, which will cut their profit.”

He added: “There are still tough times ahead for Japanese electronics makers.”

Panasonic also said it would abandon the consumer smartphone market as it struggles with the tough competition. Its announcement came a day after rival NEC said Wednesday it had slipped into a loss, owing to costs tied to its own exit from the business.

Sharp said its first-half net loss shrank dramatically to $44 million, crediting the improvement to strong demand for its liquid crystal display panels used in smartphones and tablet computers as well as solar panels.

It also said it had benefited from cutting labor and other fixed costs while reining in capital spending.

Last year the maker of Aquos-brand electronics warned it may go out of business as it scrambled to secure crucial bank loans while offering its Osaka headquarters as collateral.