As TVs struggle, new Panasonic chief prepares thorough review

TOKYO Mon Jul 9, 2012 7:58am EDT

1 of 2. Panasonic Corp's new president Kazuhiro Tsuga poses in front of the company's logo before his interview in Tokyo July 9, 2012.

Credit: Reuters/Kim Kyung-Hoon

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TOKYO (Reuters) - Panasonic Corp's new president vowed on Monday to implement a sweeping shake-up of the sprawling electronics maker that will see loss-making units shuttered or sold in a bid to revive profitability at the struggling conglomerate.

Less than two weeks after shareholders approved him as president, 55-year-old Kazuhiro Tsuga has begun the task of deciding which of Panasonic's 90 business units may be axed. He told reporters in Tokyo that he would have an outline of that plan by the autumn and a detailed roadmap by February.

"Panasonic has a lot of units that are undermining company-wide profitability," Tsuga said, adding the company may have to increase a planned 41 billion yen ($516 million) restructuring outlay in the year to next March - for lay-offs and the disposal of redundant plant and other equipment.

He conceded that Panasonic's 330,000-strong workforce is "a lot", but gave no indication of how many jobs could go.

Tsuga's talk of swift and deep cuts is rare among Japan's conservative corporate culture, and unprecedented for the head of Panasonic, a company steeped in tradition where managers still refer to a 250-year business plan their founder, Konosuke Matsushita, wrote between the two world wars.

The 10-generation roadmap exhorted staff to end poverty and make consumer goods as abundant and cheap as tap water - but probably didn't envisage selling millions of TV sets at a loss. In the year to March, Panasonic reported a record loss of close to $10 billion.

"Before thinking about the 250-year plan, we should consider whether we can survive until 2018," Tsuga said, referring to Panasonic's centenary year.


Tsuga's planned restructuring will begin in earnest in October, with plans to reduce staffing at Panasonic's headquarters to several hundred from 7,000, with many of those posts dispersed through the company's business units.

"We will be waiting to see how far he can push reform across the whole company," said Nomura Holdings analyst Shiro Mikoshiba wrote in a recent report.

Tsuga's prime task will be to transition Panasonic into a future where TVs are no longer a central pillar of sales and profit, replaced by income from washing machine, batteries and other products, much of it made overseas.

($1 = 79.5300 Japanese yen)

(Reporting by Tim Kelly; Editing by Edmund Klamann and Chris Gallagher)

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Comments (1)
jhvance wrote:
Panasonic used to sell the best (by far) DVRs available in the US which had both hard drive and DVD-burning capability. They still make such models, but they’re only available in Asian and European markets and Panasonic no longer sell them in the US — why?

Probably because the RIAA and/or the combined forces of mainstream network TV and advertising giants were seriously unhappy that a) broadcast content might be copied, and b) the advertising spots would be removed by the users who would naturally edit undesired parts of any show they recorded and wanted for their personal archive.

The sale and rental of TV series through post-broadcast DVDs had become a key financial underpinning for the networks and production studios, and advertising sales is still a critical aspect of any show’s economic viability so long as there are enough viewers whose eyeballs can support the broadcast rates charged. That business model is in decline with the rise of online viewing as broadband Internet service penetrates more of the country, so perhaps Panasonic might consider returning to the US market with an up-to-date line of DVR models — bet it would significantly boost their revenues.

Jul 09, 2012 9:25pm EDT  --  Report as abuse
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