Tuesday, April 24, 2018
News Roundup

Japan's electronics behemoths speak of dire times ahead

TOKYO — After years of bets gone wrong and lost opportunities, three of Japan's consumer electronics giants are showing some signs of faltering.

In the most dire warning, Sharp forecast last week a $5.6 billion full-year loss and warned that it had "material doubts" about its ability to survive.

On the same day, Panasonic's shares lost a fifth of their value in Tokyo after the company forecast a $9.6 billion annual net loss from writedowns in its solar-power, battery and mobile handset businesses.

And Sony, perhaps the best positioned of the companies, posted a net loss of $194 million for the quarter on Thursday and warned of falling sales in almost every product it sells.

While Sharp is in the most serious trouble, the three companies' woes are similar at the core.

All three make good quality, even cutting-edge products — but so do their overseas competitors, usually at lower prices. None of the three have managed to generate the brand pizzazz of Apple or the marketing muscle of Samsung Electronics. In addition, a stubbornly strong yen continues to sap their competitiveness, while Japan's territorial dispute with China has hurt sales there.

The scale of the losses is the result of specific missteps, from huge investments in the wrong technologies to a reluctance to exit loss-making businesses. A manufacturing bubble here in the mid 2000s — fed partly by an unusually weak currency and Americans flush with cash from rising home prices — masked continued weaknesses in their business models and spurred the companies to take big bets that backfired.

When the worldwide financial crisis brought that boom to an end in 2008, the three were saddled with excess capacity, bloated workforces and investments that they could hardly hope to recoup. And their refusal to make a big enough departure from the ways of their glory years is now making a comeback difficult.

"Many investors are longing for reforms that will let all of the pus out," Yuji Fujimori, technology analyst at Barclays Capital in Tokyo, said in a recent note to clients.

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