Panasonic to Trim, Consolidate Business Units

The Wall Street Journal, in an article headlined "Panasonic to Pare Unprofitable Units," (no link because the content is behind a subscriber wall—Google the title to get to the article), is reporting that Japan's Panasonic Corp., a maker of digital cameras and sensors, will reorganize in an attempt to target profitability over revenue. It will pare the number of its business units from 88 down to 49 and work to improve vertical integration within the units. In a departure from its usual practice, but in keeping with its new goals, it announced no new revenue targets.

As part of this restructuring, "...the company in late December agreed to sell a business making digital cameras for other companies' brands to a private-equity fund. Last month, it agreed to merge its system large-scale integration chip-design and -development operations with Fujitsu Ltd.'s to form a new company."

The company's woes stem in part from its flat-screen TV division.

Mike
(Thanks to mcd)

Original contents copyright 2013 by Michael C. Johnston and/or the bylined author. All Rights Reserved. Links in this post may be to our affiliates; sales through affiliate links may benefit this site.

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Featured Comments from:

D. Hufford: "The main reason Japanese TVs are doing poorly is that Korean TVs are doing well and at a cheaper price. Just ask an employee of one of the Japanese companies. Pretty commonly known in Japan. Of course there are other reasons too, one being that the TV market is saturated. The question is: Is Panasonic gonna continue sinking money down the TV hole? Panasonic is not the only TV maker in trouble; all of the Japanese makers are."

Comments

[Homer Office]

I bet they didn't think of trying this first: "SunCloud SolarPowered SelfGenerating Digital Camera" (url: http://www.acgears.com/photography/digital-cameras/suncloud-solarpowered-selfgenerating-digital-camera / photo: http://www.acgears.com/images/f_temawashi.jpg )

[Earl Dunbar]

I'm not surprised renevue is down, as that's an fairly obscure accounting term. ;)

I have a Panasonic plasma TV, and it is fabulous. I don't know how their LCD/LED sets perform, but if they're at a level similar to the plasma, then the only reasons the flat screen division has "woes" would be pricing or marketing.

[Tom Burke]

+1 on the experience with Panny plasma TVs; excellent machines. Never had a Panasonic camera so I can't comment.

[Ian]

In response to Earl, the viera TV sets are excellent. When I last looked they were top of the Which (consumer test magazine) ratings. So I bought one. I'd be surprised if they made a loss - in the UK, at least.

I'm also very impressed with my LX7 and the Panaracer Pasela tyres on my bicycle! Quite a diverse company

[Wolfgang Lonien]

I'm with Earl here - both my brother an me bought 42" LED TVs from them last year, and we're quite happy with them. Picture quality is marvelous!

[Paul C]

They're getting killed in the TV market by lower-cost sets. Sony and Sharp are in the same boat. Philips just sold off it's money-losing TV division and is seeing increased income. Samsung and LGE seem to be the only major player in decent shape. Given that they make their own panels, and sell a lot of panels to other companies, they may have efficiencies that others don't.

Also, the bottom has fallen out of the Plasma TV market (which is hitting Panasonic hard), and overall sales are down.

[Andre]

Regarding Earl's comment, the entire TV set manufacturing industry has been in the doldrums for a while now. In the early 2000s the combination of the switch from analog to digital TV broadcasts and the falling prices of flat screen sets created huge demand for new TV sets in most major markets. All of the manufacturers ramped up production to meet it. Once that demand was mostly satiated, all manufacturers found themselves with lots of excess manufacturing capacity for TVs. I don't know if Panasonic's TV business woes are worse than average, but everyone's struggling to find a way to stay profitable in that space.

Because TVs are tied to broadcast standards, manufacturers can't treat it like the camera business where they keep upping the basic specifications for each new generation to convince people to replace a perfectly good working device every few years. Instead, manufacturers have tried to convince people to buy new TVs by driving prices down on bigger screens (somewhat successful), pushing 3D TV (mostly unsuccessful for a variety of reasons), and making "smart" TVs (no one's been particularly successful at that yet, and everyone is waiting to see what Apple does in that space). None of this has come close to driving demand back to what it had been a decade ago.

4K TV is (supposedly) the "next big thing" but, because of the huge bandwidth needed to feed TV images at that resolution, there are serious technical and financial hurdles to overcome before mass-market adoption is likely to happen.

[bill vann]

There is a growing glut of the "same" camera right now anyway,so some of this does not surprise me, they are just dividing the pie among more "vendors."

I can't really say if this will help or hurt us, but maybe we'll see more and better glass instead of the next generation super cam with little other than a new name and model numer with no practical value, although this seems to be hitting the fixed lens small sensor market hardest.

Also glass is more difficult than "eletronics," yes wafer technology for the sensors is expensive but that is the only expensive component in a camera.

I'd like to see interchangeable sensor packages. Not sure this is viable yet, but in computers a CPU manufacturer will commit to a "standard" socket and improve CPUs for it until maxed then change the socket and start over. We (I) typically get a reasonable lifespan from a basic desktop, changing out the CPU once and likely getting 2-3x the life of the machine.

A few mixed ideas here and I wandered a bit, but I think the market,high flying for a few years, is in for a tough road.

E.g. I REALLY like the new Fuji, but there is not enough differentiation for me to move from my NEX7 and (next $$$ purchase) Zeiss 24. In fact a few months ago I thought to sell the NEX as the glass was errrr ...deficient, but now we're seeing new and superb glass. It is interesting that Sony chose the cheaper part first, the camera, and now with a viable market is increasing glass.

I'm just sayin

b

[David]

Another Panasonic plasma owner and fan here and I'm genuinely saddened to read elsewhere Panny seems on the verge of pulling that plug after carrying the "Kuro torch" for a while.

In more than one online opinion you can read where the state of the art for consumer television picture quality actually regressed when Pioneer left the market. Now it's going to happen again, because the OLED screens geeks are pinning their hopes on isn't ready yet to become a commodity item.

It's my opinion LCD's vast market dominance has never been much about picture quality. Can of worms, that. Sorry if that upsets the LCD TV owners here.

[Roberto M.]

"....then the only reasons the flat screen division has "woes" would be pricing or marketing."

No, another reason is extremely poor service and QA. I was a big fan of Panasonic for both cameras/lenses and TVs, but I've been burned many times the last couple of years.

Just ask me about my two high end plasma TVs, both of which failed exactly at 13 months (warranty is 12months) -- where Panasonic will sell the needed repair part for MORE than what the whole tv cost just a year earlier! Or ask me about my two expensive Panasonic 4/3 lenses, both of which need service, but Panasonic refuses because they consider lenses to be 'parts' and neither of these 'parts' is now sold, so no longer serviced, either.

I know Panasonic is not the only manufacturer to be 'saving' money now by cutting back on service, but they are the company that I personally can no longer trust for buying expensive goods - and I really liked what I purchased, when the items worked. I'll never understand why companies risk their long term reputations for such short term gains.

[Ed]

BTW,

Philips is sort of my neighbour and when I was born in Eindhoven it was literarry under the smokestacks of the Philips company. Then they had at least three brands of TV's, Erres, Aristona and Philips, they invented the compact cassette and together with Sony invented the CD and alone invented the DCC (a non product that combined the disadvantages of tape with the disadvantages of digital recording but saw a second live in the Onstream DCS datastorage devices). Now they recently stopped making consumer electronics full stop. I believe the only thing they do build in Holland are Philishaves (but I'm not even sure of that) and of course medical machinery. I've met Frits Philips once as he was retired and busy growing organically farmed apple's (and these apple's sure had bite).

Greets, Ed.

[Chuck Holst]

I went shopping for a TV recently, and it turned out to be a lot more work than I expected.

First, I wanted a 16-inch or 19-inch TV with a phone jack for watching near a noisy furnace while exercising on my Nordic Track. But the quality manufacturers are no longer making TVs that small! Oh, Samsung makes a 19-inch, but it no longer has a phone jack.

Second, there are very few bricks and mortar stores anymore where you can actually inspect a TV before buying it. In one shopping area near me there used to be five such stores: Best Buy, Target, Circuit City, Ultimate Electronics, and CompUSA. Now only the first two are left, and they carry only a limited number of brands.

Third, not all TVs, especially newer models, are reviewed on Amazon.com, and when they are, the information you need to know is frequently lacking. I bought a 15-inch Coby model, but had to return it because the viewing angle was so narrow the contrast fluctuated as my head bobbed up and down. I also learned how minimal built-in DVD players are, and that all TV phone jacks have an annoying hiss on them. Fortunately, I was able to return the Coby and replace it with something more satisfactory.

I don't know what the solution to this is. The TV market is saturated, and at the same time, online shopping has wiped out many local stores. Too bad about Panasonic, but they either didn't make a TV that met my requirements, or it wasn't available locally.

[Earl Dunbar]

Roberto: My Viera is well into it's 2nd year, coming up on three, with no issues whatsoever. I'm truly saddened you've had a bad experience.

Chuck: You think that's bad? Try shopping for really good portable headphones. :)

[Thom Hogan]

It always surprises me that consumer electronics companies aren't prepared for the inevitable: if you pioneer something and make profits off it, unless you can fully protect the product with IP, every other consumer electronics company will come running and the war of racing to the bottom begins. Always.

Everyone always starts with "we can undercut them a bit and still make a profit." The problem is that you have to be intensely disciplined because once the race to the bottom starts, it just gets more and more intense. Pennies start to count.

Japan culturally and structurally has problems with this. The three-year severance rule means companies keep people on when they really need to jettison them. The yen appreciation hurt, too (now reversed, but that is now causing new issues: all those overseas subsidiaries now cost 20% more to run). The insane diversification got so out of hand that when Olympus bought things like a cell phone store and a tupperware company, it looked "normal" (despite the fact it was a ruse to hide a payback of US$1.7 billion in investment losses). Sony's strongest businesses are financial services, movies, and music, in that order.