Panasonic slashes profit forecast by 40% after surprise sales dip

Yesterday, Panasonic revealed that their operating profit forecast dropped down by 40%. Last month, however, they said that it was too soon to say anything about the effects of the economic crisis.
They expect to have an operational profit of Y340bn and a net loss of Y98.5bn. According to the company, this is due to “restructuring costs and losses on its securities portfolio”.
The finance director of Panasonic causes the decreased sales to "the rapid economic slowdown and lower prices due to fierce competition", but in September, the company’s president said that they were not having serious problems with the sales.

Because of the negative news, the consumers are afraid that the biggest rivals of the Japanese electronics giant have not been honest about the effects of the crisis. For instance, Sony has announced a cut of almost 60% in operational profits.

Of the total amount of reduction, Y80bn is due to price competition with Korea. The rest is caused by a setback in sales, mostly of electronic parts for cars. The Japanese company is thinking of closing or selling product lines that are not profitable.

The company wants to cut Y500bn of capital expenditure this year, and it thinks that the situation will continue for next year.

The president of Panasonic did not commented the take-over bid for Sanyo, one of its biggest rivals.


We see that the crisis is still having its effects. Even after 2 to 3 months, there are still companies that get into trouble. I think that several companies will follow in the next few months, companies of which we thought that they would not get into problems.

It ‘s bad that companies as big as Panasonic get that negative results. These companies are crucial for the economy. This news must be very hard for the shareholders, because of it, the share value decreased.

But as I said above, I think that many shareholders will lose a lot of their investments in the next months, which is kind of logic with a crisis this big.
For people who want to start invest, this is a good time. Shares are low. The only problem is that the people don’t trust it anymore, but I’m convinced that confidence is what we need in order to restore.

Source: The Financial Times - Panasonic slashes profit forecast by 40% after surprise sales dip -
http://www.ft.com/cms/s/0/ea7cef08-bceb-11dd-af5a-0000779fd18c.html