* Panasonic wants to expand automotive, housing business,
cut back electronics
* Sees net income 50 bln yen next year, 350 bln op profit by
(Updates with comments from analyst, Tsuga's goals)
TOKYO, March 28 Japan's Panasonic Corp
fell short of announcing any job cuts in its medium-term
business blueprint, though it will spend 250 billion yen ($2.7
billion) over the next two years to revamp its TV, mobile phone
and semiconductor units.
President Kazuhiro Tsuga, who last year surprised investors
by describing Panasonic as a "loser" in consumer electronics,
told reporters in Tokyo on Thursday that the near-century-old
company will expand its automotive and housing development
businesses as it pulls back from those unprofitable consumer
Like Sony Corp and Sharp Corp, Panasonic's
TV unit has been battered by Samsung Electronics Co
and LG Electronics Inc as the Korean companies
pushed out cheaper products. Panasonic, Japan's biggest
commercial employer, is set to report its second straight annual
net loss and is now under pressure to dump weak businesses and
trim its payroll.
"Panasonic has talked about selling assets, but without
cutting workers too, it will come across as a restructuring plan
that lacks teeth," said Makoto Kikuchi, the CEO of Myojo Asset
Management in Tokyo. "Panasonic does not have the sort of
corporate culture which you would expect to see serious
Panasonic said its 88 business units would be re-arranged
into 49 units under four divisions. It did not say if jobs would
Tsuga has slimmed down his headquarters from around 7,000
people to 150, small enough, he says to fit everyone in the same
room. But even after more than 40,000 job losses in the past two
years, Panasonic still employs more than 300,000 people.
Strict labour laws and the high cost of layoffs, which in
Japan can be as much as three years' salary, often dissuade
businesses from deep cuts.
In the case of Panasonic, founder Konosuke Matsushita once
exhorted his managers to "make people before making products."
Taking over as president in April last year, Tsuga, 55,
promised tough love to rehabilitate a company that got its start
in 1918 making extension sockets and bicycle lamps.
Tsuga, who joined Panasonic in 1979 with a degree in
biophysical engineering, spent his first 29 years at the company
in research and development on technologies including voice
In 2003, he led talks with competitors and Hollywood studios
on establishing a Blu-ray standard for DVDs, making his first
move into management in 2008, when he was put in charge of
automotive components. He counts a lack of tribal attachment to
any one part of the Panasonic's business, which ranges from
hybrid car batteries to washing machines, as an advantage.
In October last year, Tsuga bit the bullet on non-performing
businesses by writing down billions of yen in tax-deferred
assets and goodwill related to its mobile phone, solar panel and
small lithium battery businesses. The result of that is a
forecast net loss of $7.8 billion in the year that ends Sunday.
Since peaking at $97 billion in 2007, Panasonic's sales have
contracted by a fifth. Over the past decade, cumulative net loss
adds up to about $13 billion.
Tsuga has set an April start line for all of Panasonic's
business units to reach a minimum 5 percent operating profit
margin. Tsuga has also halted dividend payments for the first
time in more than six decades.
Tsuga's plan "isn't about what they are going to do, it's
about what they are going to dump," said Yuuki Sakurai, the CEO
and president of Fukoku Capital Management in Tokyo, ahead of
Panasonic will seek external investment in its healthcare
business, which Tsuga said he will personally oversee.
Finding a partner to invest in its healthcare business means
Panasonic will not need to divert resources away from other
units in need of funding to expand its scope and sustain growth.
Panasonic also said it will also sell its majority 67
percent stake in a logistics business to Nippon Express Co Ltd
Doing so would bolster cashflow, helping Tsuga maintain a
target to keep it at a minimum of $2.1 billion. Any shortfall
will made up from sales of land, buildings, businesses and other
In the year ending on March 31, that garage sale, including
the $530 million sale of a 43-storey office building in Tokyo,
will add up to around $1.3 billion.
For the next business year, Panasonic said it expects net
income to reach 50 billion yen.
It is also targeting an annual operating profit of 350
billion yen and a margin of 5 percent by March 2016.
($1 = 94.3700 Japanese yen)
(Reporting by Tim Kelly; Editing by Ryan Woo)