Thanks to the flat-screen TV boom and significant restructuring efforts, Matsushita, the world’s leading consumer electronics company, has returned to profitability. However, they now need to seek a new “hit” product to determine the fate of their struggling JVC division.
With aggressive cost-cutting measures and booming revenues from plasma TVs, Matsushita Electric has achieved its highest profit in the last 15 years. Yet, there still remain “boils,” weaknesses that could threaten the company’s future growth.
Lack of a Star Product
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| Source: Plasmatvbuyingguide |
First and foremost is the absence of a “star” product, akin to the iPod and iTunes in Apple’s business. Investors are concerned about the increasing competition in the flat-screen TV market and are skeptical that significant investments in digital cameras and next-generation DVD players will bear fruit.
“Digital cameras are products on the verge of saturation. Even high-end models are under price pressure, which carries many risks. No one can confidently predict the future of next-generation DVDs,” stated Mitsushige Akino, a fund manager at Ichiyoshi Investment Management. “I have yet to see a product capable of replacing plasma in their next growth phase.”
Matsushita’s recent success can largely be attributed to President Kunio Nakamura, who implemented a series of staff cuts affecting thousands of employees.
However, this June, Matsushita will have a new president, and investors are closely watching whether the new president, Fumio Ohtsubo, can find a new “growth engine.”
JVC – A Difficult Decision
Another major concern is the fate of JVC, a well-known electronics brand familiar to many Vietnamese consumers. Former President Nakamura consistently supported JVC, but the new president has stated that the relationship between Matsushita and JVC is quite complex.
“This division is both a partner and a competitor to Panasonic’s key products such as camcorders and flat-screen TVs.” It is likely that Mr. Ohtsubo will sell the 52.4% stake in JVC, valued at approximately 78 billion yen (697 million USD), in the near future.
This move has been anticipated, as analysts believe Matsushita has not benefited much from fully owning JVC due to a lack of “harmony” between the two entities.
Until now, the biggest obstacle to Matsushita selling JVC was President Nakamura. With his retirement in June, the final barrier has been removed.
Due to weak demand for traditional TVs and music players, JVC’s revenue has continuously declined. Over the past two years, this brand has consistently reported losses and has become a significant burden, hindering Matsushita’s robust growth.
Headaches from Mobile Phones
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| Source: Amazon |
The mobile phone division is also a major concern for Matsushita. Last year, Panasonic had to scale back its operations in overseas markets, in stark contrast to the successful joint venture between Sony and Ericsson, which is enjoying success with the Walkman phone line.
Hundreds of employees were laid off, and the mobile division’s goal for this fiscal year is to achieve a profit of 6 billion yen, a “dream” that seems uncertain after last year’s loss of 8.4 billion yen. Furthermore, Matsushita cannot expect strong growth when they are solely focused on the now-saturated domestic mobile market.
Golden Hopes
The division that has brought Matsushita the most pride is plasma TVs (holding a 25.8% global market share, far ahead of the runner-up LG Electronics at 14.9%).
To strengthen its position, Matsushita will invest an additional 180 billion yen to build the world’s largest plasma display manufacturing plant in western Japan.
Additionally, the company plans to release the first mirrorless digital camera and Blu-ray disc player this year. However, analysts believe that these devices will struggle to become significant profit generators like plasma TVs.
Thien Y
