Panasonic shares plunge 20%

2012-11-01 08:38

Tokyo - Shares in Panasonic dived nearly 20% on Thursday after the Japanese firm warned of a mammoth $9.6bn annual loss in the latest sign of trouble for the nation's hard-hit electronics giants.

The dramatic plunge came as media reports said Sharp would book a record $5.6bn annual net loss, nearly double its official forecast.

The Panasonic stock opened at ¥414 on the Tokyo Stock Exchange, down by their daily loss limit of ¥100, representing a 19.45% fall. They had recovered slightly to ¥419 by 10:50 am local time (01:50 GMT).

Investors dumped the shares following Panasonic's announcement after markets closed Wednesday that it would book a $9.6bn net loss for the year to March 2013 as it undergoes a major overhaul of its troubled business.

While it said it would achieve an operating profit, restructuring costs and writedowns would result in the ¥765bn shortfall, close to Panasonic's record ¥772.2bn shortfall 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 March next year.

"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."

Panasonic, like rivals Sony and Sharp, which report earnings later on Thursday, has suffered in its television business amid falling prices and stiff overseas competition, while a strong yen has also hit Japanese 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 South Korea's Samsung Electronics, which have set the pace in the lucrative global smartphone market.

Samsung, by contrast, posted a record third-quarter profit of nearly $6.0bn, powered by strong sales of its Galaxy smartphones and display panels.

Last month Moody's cut its credit rating on Panasonic, citing the struggling firm's weak profitability and high debt, largely tied to its acquisition of smaller rival Sanyo.

The company 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 disaster have added the woes of companies facing a progressively worsening situation in recent years.

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

Sharp was to report its results later on Thursday, as was PlayStation maker Sony which lost ¥456.66bn last year, its fourth consecutive annual shortfall.

The once Walkman maker has said it would eke out an annual net profit of ¥20bn, as it too performs major surgery on its business with thousands of job cuts and huge restructuring costs.