Panasonic More Than Just TV Assets, CEO Says
01/08/2013| 11:26pm US/Eastern
LAS VEGAS--In his first major address to an international audience, Panasonic Corp.'s (>> Panasonic Corporation) new chief executive said the Japanese electronics conglomerate is more than its struggling television business and has a range of operations poised to capitalize on the shift to energy efficiency in homes and automobiles.
"Most of you may think of Panasonic as only a television manufacturer," Panasonic Chief Executive and President Kazuhiro Tsuga said during a keynote speech at the Consumer Electronics Show. But "our future is being built on far more than one single product."
Mr. Tsuga became CEO in June at a moment of crisis for the venerable Japanese electronics manufacturer. The company has lost money in three of its past four fiscal years and in November, Panasonic reported a Y685 billion ($7.84 billion) quarterly loss and forecast another year in the red.
The continued woes at Panasonic prompted Mr. Tsuga to call his company a "loser" in the consumer electronics industry. Its recent problems stem from its big bet on flat-panel televisions with massive investments in manufacturing screens for both liquid crystal and plasma display TVs.
The straight-talking former engineer is undergoing a review on how to reshape Panasonic's sprawling portfolio of businesses. He has said, starting in April, the company will streamline its 88 business units to 56 units, with only subsidiaries capable of a 5% operating margin making the cut. On Tuesday, he said the company aims to streamline the business units to 50. As part of that plan, Panasonic is currently considering a possible joint venture for its system large-scale integration, or LSI, chip business, he said. But the executive declined to disclose potential partners. The business, which has been unprofitable, makes non-memory chips used mainly in televisions and other digital audio-visual products. In February last year, a person familiar with the situation said that Panasonic was in talks with two Japanese technology firms--Renesas Electronics Corp. (>> Renesas Electronics Corporation) and Fujitsu Ltd. (>> FUJITSU LIMITED)--to integrate their system LSI operations.
Based on the company's own estimates, Panasonic's losses are expected to total more than Y1.5 trillion, or around $17 billion, over the last two fiscal years, which end in March. The losses have forced Panasonic to take drastic measures to keep its finances strong.
In order to maintain liquidity, Panasonic said it received a Y600 billion credit line from banks and a Y150 billion bond registration. It will skip its annual dividend for the first time since 1950, a reversal for a company once considered so financially stable that it earned the nickname "Panasonic Bank."
The Panasonic chief didn't address the company's problems during the speech, focusing instead on his vision for how to reboot the nearly century old conglomerate. He aims to move the company away from its over-dependence on consumer electronics and focus on selling its products and services to other businesses.
Mr. Tsuga showed how Panasonic would play a bigger role behind the scenes to bring its consumer-facing technologies to other businesses, including supplying information and entertainment systems to car makers and airlines. He also said Panasonic will focus on finding ways to introduce its green technology to homes and office buildings with solar panels and energy management systems.
Even as he sought to show that Panasonic is more than a TV manufacturer, Mr. Tsuga said the company remains committed to the segment. He said he expects the "next five years will transform [the TV] more than the last 25 years."
Write to Daisuke Wakabayashi at firstname.lastname@example.org
Subscribe to WSJ: http://online.wsj.com?mod=djnwires