Sharp, Panasonic Continue To Show Weakness
Benzinga | Nov 06, 2012 12:45AM ET
After announcing disappointing second quarter business results last week, Panasonic (PC) shares fell to a 37-year low on the Tokyo Stock Exchange overnight. The once-mighty consumer electronics company is taking huge charges to restructure its business and announced that it will not pay a dividend to shareholders for the year ending March 31, 2013.
Sharp (SHCAY), Japan's largest manufacturer of LCD panels, is flirting with bankruptcy. Press reports today suggest that Sharp may seek a Bloomberg reports, the company is having difficulty finding a buyer for its IGZO products. Just because the product is better, doesn't mean customers will be willing to pay more.
Panasonic is in a similar position but, as a much larger company with a broader product line, it is even more difficult to manage. This is rather ironic for a company founded by Konosuke Matsushita, who is often referred to by Japanese as the “God of Management.”
It is hard to see how these companies can turn themselves around without a significant weakening of the yen. Both are dependent upon exports and must increasingly compete in emerging markets where low price tends to trump high quality.
Also, both companies have lagged behind in product design and marketing, areas where Apple (AAPL) excels.
If anything, both Panasonic and Sharp have become ever more dependent upon the Japanese market and less able to compete effectively overseas. It is likely to take a major change in management philosophy for these companies to engineer an effective turnaround.
By Jeff Uscher
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