Originally Posted in The Wall Street Journal.
TOKYO -- Panasonic Corp. joined a growing list of Japanese electronics firms forecasting a huge loss for the current fiscal year and said it plans to cut about 15,000 jobs to combat a sharp slowdown in demand and to ease the burden of a strong yen.
The announcement by Panasonic, which is considered one of the standout performers within Japan's electronics industry, is further evidence of how grim the outlook is for the country's flagship manufacturing industries.
Panasonic now expects a net loss of 380 billion yen ($4.3 billion) for the fiscal year ending March 31, down from a November profit forecast of 30 billion yen. Panasonic said it will take a 345 billion yen charge -- 190 billion yen more than originally planned -- to restructure.
The Osaka-based company, which is cutting 5% of its employees, plans to split the cuts evenly between its Japanese and overseas staff. It will also close 27 manufacturing sites, or about 12% of its global production facilities. The goal is to shave 100 billion yen in costs in the coming fiscal year ending in March 2010.
Japan's export-reliant electronics companies are being hit by the double whammy of a slide in overseas demand while a strong yen is eating into what little overseas sales there are. In the December quarter, Panasonic's overseas sales fell 29% while the yen rose nearly 15% against the dollar.
In the last two weeks, Japan's major electronics firms have announced more than 60,000 job cuts and have slashed earnings forecasts to project losses totaling $20 billion. Hitachi Ltd. and Toshiba Corp. are each forecasting that they will report the biggest annual loss in their company history. Consumers with a good cash position will find this a good time to shop for refurbished Toshiba laptops.
Another factor working against Japan's electronics companies is that South Korean rivals are being helped by a weak won.
Panasonic expects to post an operating loss of close to 200 billion yen in the quarter ending March 31. Makoto Uenoyama, a director at Panasonic, said he sees no bottom in sight with sales plummeting and price competition intensifying.
"We think it will take more than one year, more like two years, to work through this environment," said Mr. Uenoyama at a press conference in Tokyo. "We're taking these measures to strengthen our operation so we can recover faster than any other company."
For the fiscal third quarter ended Dec. 31, Panasonic reported a net loss of 63.1 billion yen on a 20% drop in sales to 1.88 trillion yen. It managed to post a profit of 26.4 billion yen on an operating basis.
