Sony, Panasonic TVs Star in Price Battle in China Showrooms

Bloomberg

 

Sony Corp.’s and Panasonic Corp.’s ambitions for higher earnings this year depend on convincing Yin Weiguang, a retired construction worker in Beijing, that he chose the wrong television.

“I don’t really care about fancy features,” said Yin, 55, who paid 2,799 yuan ($413) for a 32-inch set made by Skyworth Digital Holdings Ltd. “I just use it for basic entertainment: watching news, weather forecast and TV series.”

Sony and Panasonic, the world’s two largest makers of consumer electronics and Sony camera batteries, are slashing some TV prices by a third in China after being outsold six-to-one by Shenzhen-based Skyworth. Sony aims to double TV shipments in China this fiscal year, and Panasonic expects 50 percent growth in the world’s second- largest market for flat-panel TVs.

“The price battle in China will likely intensify as local manufacturers, South Korean makers and Japanese companies all fight for market share,” said Yoji Takeda, who heads the Asian equity management team at RBC Investment (Asia) Ltd., which oversees $1.1 billion. “Prices will probably continue falling with increased market supply during the second half.”

In December, Sony offered a 32-inch set for 3,000 yuan, or 33 percent off the previous price for that size, targeting customers in regional cities and rural districts, said Yuki Shima, a spokeswoman for the Tokyo-based company. To help cut costs, Sony has increased outsourcing of TV production to Foxconn Technology Group, the world’s largest contract manufacturer of electronics.

50 Percent Cut

Panasonic, the world’s biggest maker of plasma TVs, may cut prices of some models in China as much as 50 percent this year, Hitoshi Otsuki, senior managing director of the Osaka-based company’s overseas operations, said in an interview last week.

“The market is totally different from the U.S. and others,” Otsuki said. “In China, domestic manufacturers are very powerful, especially in low-end products. The smaller sets are the fastest-growing area and the most difficult for us.”

Sony slipped 0.7 percent to close at 2,681 yen in Tokyo, narrowing its gain this year to 0.4 percent. Panasonic fell 1.2 percent, extending its loss in 2010 to 17 percent. Skyworth Digital dropped 0.4 percent at the midday break on the Hong Kong Stock Exchange.

Biggest Flat-Panel Market

Sales of liquid-crystal-display TVs in China will rise 15 percent to 45.5 million next year and overtake North America shipments, according to DisplaySearch estimates. China will become the biggest flat-panel TV market, including plasma sets, in 2012, according to the Austin, Texas-based researcher.

Skyworth is the market leader in China with a 15 percent share, followed by domestic rivals Hisense Electric Co. and TCL Corp., according to AVC Consulting in Beijing.

Japan’s Sharp Corp. was the top non-Chinese vendor with 4.9 percent, followed by Samsung Electronics Co. and LG Electronics Inc. of Seoul. Sony and Panasonic, the maker of Viera-brand TVs, each had 2.4 percent.

“Sony has started to take more serious action in China,” Shima said, citing the introduction of the lower-priced model in December. “We need to become sensitive about changes on products and business models for China.”

A price war may reverse the optimism sparked last month after the Japanese companies increased profit forecasts, said Yuuki Sakurai, chief executive officer of Tokyo-based Fukoku Capital Management Inc. Sony and Panasonic on July 29 cited better-than-expected sales of flat-panel TVs for raising their full-year projections, sending shares of both companies higher in Tokyo trading the following day.

Sony estimates 60 percent growth in worldwide TV sales by volume and Panasonic 35 percent.

“There’s no way Sony and Panasonic can compete with Chinese producers in terms of prices,” Sakurai said. “Even the South Koreans are struggling. Chinese consumers aren’t very keen on top-quality products.”

Samsung, the world’s largest TV maker, said last month that falling set prices may erode profitability this quarter. The company intends to keep prices above those of Chinese producers.

“We will stick to a strategy that will make people aware of our premium image,” said Chenny Kim, a spokeswoman at Suwon, South Korea-based Samsung. “We won’t compete with local companies in pricing.”

Skyworth’s annual shipments in China rose 12 percent to 7 million units in the fiscal year ended March 31 from a year earlier, the company said April 19. Revenue from the business increased 55 percent.

Competition, What Competition?

Skyworth, whose shares trade in Hong Kong and Frankfurt, isn’t concerned about international competitors, said Shen Jian, a spokesman. Brands from abroad account for about a quarter of the TVs sold in China, according to DisplaySearch.

“Domestic branded TVs are cheap and durable,” said Yin, who receives a monthly pension of about 4,000 yuan.

A 40-inch, international-brand TV sold for an average of about $902 in the second quarter, or about 33 percent more than Chinese marques, according to DisplaySearch.

“Our advantage is we are a local brand,” Shen said. “We don’t worry about the competition at all.”

Still, the price cuts may be helping overseas companies make inroads. Chinese producers’ combined market share fell to 76 percent in the first quarter from 83 percent the previous three-month period, according to Hisakazu Torii, a Tokyo-based analyst at DisplaySearch.

Value For Money

Liu Lin, 29, said non-Chinese TVs are worth the extra cost.

“The quality of Sony’s picture is really good,” said Liu, who bought a Sony 46-inch Bravia set for 5,999 yuan, or more than half her monthly pay. “Quality and price are of the same importance in buying a TV set.”

Japanese TV makers also face the hurdle of a stronger currency that’s giving them less room to cut prices than South Korean rivals. The yen has gained about 7.4 percent against the yuan this year, while the Korean won has weakened 1.2 percent.

They may get a boost from the falling prices of flat panels and used monitors, typically the costliest TV component. LG Display Co., the world’s second-largest LCD maker, last month forecast that panel prices would decline an unspecified amount through August.

“Price is my top concern given I’m not that well-paid,” said Pan Ying, who earns about 5,000 yuan monthly at a Beijing health-care company. “I’ll consider a foreign brand if the price is good.”

Porn Stars in 3-D Lure Consumers to New Sony, Panasonic TVs

Bloomberg News

 

Porn star Mika Kayama is at the frontier of a push to develop videos and content in Japan that Sony Corp. and Panasonic Corp. need to lure customers for their new 3-D televisions.

Kayama and Yuma Asami, the top actresses of adult-movie maker S1 No.1Style, will star in the country’s first DVDs for the 3-D format TVs, providing content analyst Yuji Fujimori says can trigger the success of the new sets. Sales of adult videos in Japan were 108.6 billion yen ($1.2 billion) in 2009, according to Takashi Kadokura, an economist who runs Yokohama- based BRICs Research Institute. That represents about 30 percent of the overall video market in the nation, according to Kadokura.

“Adult videos will likely be an incentive for consumers to buy a 3-D TV,” said Fujimori, at Barclays Capital in Tokyo. “It’s worth paying attention to the move because it’s lack of content that’s hindering expansion.”

Closely-held S1 No.1Style will offer “3D X Mika Kayama” on June 7 and “3D X Yuma Asami,” Japan’s first pornographic titles in the new format, on June 19 to coincide with the release of Sony’s 3-D Bravia models, with more titles to follow this year, according to the producer, who uses the professional name of Sakon.

Sales Motivation

“I want to try it out,” said Satoshi Miyazaki, 33, who pays about 2,000 yen a month to watch adult cable channels. “I need something dramatic to justify replacing my TV. This could be the motivation.”

Sony, the world’s third-largest TV maker, plans to offer 3- D Bravia TVs in Japan from June 10 and in the U.S. and Europe later this summer, according to Yuki Shima, a Tokyo-based spokeswoman. Panasonic became the first major TV maker to sell high-definition 3-D sets in the U.S. in March and in Japan in April. Sharp Corp. and Mitsubishi Electric Corp. have said they plan to sell similar products.

Sony’s Shima and Akira Kadota, a Panasonic spokesman, declined to comment on whether 3-D adult movies would boost sales of the new TVs.

Worldwide shipments of 3-D TVs are expected to be 4.2 million units this year and 12.9 million in 2011, according to California-based researcher iSuppli Corp. That compares with its projection of 170 million sets this year for all types of liquid-crystal-display TVs, the researcher said May 25.

‘Avatar’ Release

3-D movies, which first appeared in cinemas in the 1920s, gained a resurgence of popularity with the December release of News Corp.’s “Avatar,” the world’s top-grossing motion picture. Suwon, South Korea-based Samsung Electronics Co., the No. 1 TV maker globally, said last month it will work with “Avatar” director James Cameron to develop content to market its 3-D sets, which went on sale in the U.S. in March.

S1 No.1Style, which releases about 25 DVDs a month, is offering 3-D titles at the same price of 2,980 yen as 2-D ones, Sakon said. Soft on Demand Co., a Tokyo-based adult-film company, plans to sell two 3-D titles on June 25 and more later this year, according to Tsuyoshi Fujimoto, a spokesman.

Local TV station Sky Perfect JSAT Corp. will join BS Broadcasting Corp. and Jupiter Telecommunications Co. in airing 3-D programs on June 19, according to the companies. Three 3-D PlayStation 3 games will be available when Sony starts selling 3-D Bravias, said Shima.

Soccer World Cup

Sony’s not aware of any announcement of 3-D titles that will be available on June 10 to coincide with the release of its new Bravia TVs, Shima said. The company’s film unit will offer “Cloudy With a Chance of Meatballs” in 3-D Blu-ray in the summer, and the 2010 soccer World Cup games by the end of the year, she said.

Sony shares have risen 1.5 percent this year in Tokyo, while Panasonic has dropped 14 percent. Japan’s benchmark Nikkei 225 Stock Average has declined 8.9 percent this year.

The 3-D TVs may help stem a decline in sales of adult movies in Japan, which have dropped about 15 percent since their peak in 2006 because of a prolonged recession and competition from free online pornography, said BRICs Research’s Kadokura. “3-D technology is just what the porn industry needed,” he said.

S1 No.1Style spent three months making its first 3-D films, triple the time for a normal production, said 29-year-old Sakon.

Actors Moves

“It was a different filming experience using a new camera,” he said. “Actors needed to move more slowly, furniture had to be relocated and lighting rearranged to make it work. But it was worth it. We’ll make a profit out of this.”

Tokyo-based Sony, which projects sales from 3-D products excluding content will reach 1 trillion yen in the year to March 2013, plans to sell Vaio personal computers that can show 3-D images before the end of the year, the company said in January.

Toshiya Shimizu, a 28-year old Tokyo resident, said he may wait for the cheaper 3-D computer.

“I want to rent the DVD first to see how good the image is,” he said. “I’d like to watch Yuma Asami in 3-D.”

Panasonic Profit May Be Boosted More Than $885 Million by Sanyo Purchase‏

Bloomberg News

Panasonic Corp., which acquired a controlling stake in battery maker Sanyo Electric Co. in December, may boost annual profit by more than 80 billion yen ($885 million) in three years by merging operations.

“Toward the end of this month, we’ll gather the sort of benefits we’ll generate by the merger,” Hitoshi Otsuki, a senior managing director in charge of Panasonic’s overseas operations, said in an interview in Tokyo yesterday. For the year ending March 2013 “80 billion yen is our target officially and we will definitely achieve it,” he said, adding it’s “definitely possible” to aim for a higher amount.

Sanyo’s solar power batteries, strong presence in Vietnam and close relationship with Wal-Mart Stores Inc., the world’s largest retailer, will likely help Panasonic beat its original target, Otsuki said. The world’s largest maker of plasma televisions made its biggest acquisition last December, paying 403.8 billion yen for 50.2 percent of Sanyo, the No. 1 manufacturer of lithium-ion rechargeable batteries.

“Panasonic hasn’t disclosed details of the synergy plan,” Kazuharu Miura, an analyst at Daiwa Securities Capital Markets Co. in Tokyo, said by phone today. “I’m waiting to see how each of the company’s businesses will benefit from the acquisition of the battery maker and how much the overall profit will expand.”

The purchase will likely boost Panasonic’s operating profit, or sales minus the cost of goods sold and administrative expenses, by 80 billion yen in the 12 months ending March 2013, the company said December 2008 when it first disclosed the purchase plan.

May Sell Assets

The two companies aren’t discussing additional job cuts and may sell some of their assets as they consolidate operations, Otsuki said. Panasonic has no plan to make Sanyo a wholly owned unit, he said.

Panasonic rose 1.7 percent to close at 1,343 yen in Tokyo trading. Japan’s benchmark Nikkei 225 Stock Average gained 1.2 percent.

Last month, Osaka-based Panasonic raised its operating profit forecast by 25 percent, as cuts in fixed and material costs lead to a recovery in earnings from consumer electronics and appliances.

Operating profit will probably reach 150 billion yen in the year ending March 31, compared with an earlier forecast of 120 billion yen, Panasonic said Feb. 5. Sales may total 7.35 trillion yen, 5 percent more than previously projected.

Analysts expect the company to post a net income of 115 billion yen in the year starting April 1, from a loss of 130 billion yen, according to the median of 19 estimates compiled by Bloomberg.

Samsung, Panasonic Start Selling 3-D TVs this Week

NEW YORK (AP) - Want to be the first one on your block with a 3-D television? It will cost you about $3,000.

Samsung and Panasonic will start selling 3-D TVs in U.S. stores this week, inaugurating what manufacturers hope is the era of 3-D viewing in the living room. But because the sets require bulky glasses, and there is for now little to watch in the enhanced format, it will take at least a few years for the technology to become mainstream, if that happens at all.

Samsung Electronics Co. announced Tuesday that it is selling two 3-D sets this week. For $3,000, buyers get a 46-inch set, two pairs of glasses and a 3-D Blu-ray player.

Panasonic Corp. has said it will start selling 3-D sets Wednesday.

The sales debut comes as moviegoers have shown considerable enthusiasm for the latest wave of 3-D titles in the theater. Last weekend, "Alice in Wonderland" grossed an estimated $116.2 million at the box office, beating the first-weekend receipts of "Avatar," the winter's 3-D blockbuster.

Although it's clear that 3-D sets for the home will appeal to technology and home-theater enthusiasts, it remains to be seen whether other consumers will be enticed to spend at least $500 above the price of a comparably sized standard TV and Blu-ray player.

TV makers hope so, because sets with the last big technological improvement - high definition - have come way down in price, below $500.

One challenge will be that the 3-D effect requires viewers to wear relatively bulky battery-operated glasses that need to be recharged occasionally. They are not like the cheap throwaways that have been used in theaters since the 1950s.

When you're wearing these 3-D TV glasses, room lights and computer screens may look like they're flickering, making it difficult to combine 3-D viewing with other household activities. Anyone who's not wearing the glasses when the set is in 3-D mode will see a blurry screen. (The sets can be used in 2-D mode as well, with no glasses required.)

To give buyers something to watch, Samsung is including a 3-D copy of "Monsters vs. Aliens" on Blu-ray disc with its packages, in a deal with the studio, DreamWorks Animation SKG Inc. Its CEO, Jeffrey Katzenberg, said it will convert its "Shrek" movies to 3-D for Samsung TV buyers later this year.

"We continue to see this amazing level of enthusiasm and excitement for 3-D. The rate of adoption for this into the cinema has been a rocket ship these last couple of months," Katzenberg said in an interview.

Sets with 3-D-capability have been available for a few years from Mitsubishi Corp. But 3-D for the home is now coming together as a complete package with the arrival of more 3-D television models, as well as 3-D video players that run on battery and 3-D movies.

But there's still a notable lack of 3-D material to watch.

Eventually, sports and other programming that will benefit from a more immersive experience should be offered in 3-D. ESPN has said it will start a channel that will broadcast live events using the technology, starting with FIFA World Cup soccer in June. The sets could also be used for 3-D video games, when game consoles catch up to the new technology.

Samsung, the world's largest maker of TVs, has high hopes for 3-D. Tim Baxter, head of the company's U.S. electronics division, said he expects 3-D systems to be in 3 million to 4 million of the 35 million TV sets sold in the U.S. this year by all manufacturers.

Research firm iSuppli Corp. puts the figure at 4.2 million units globally this year. It expects the numbers to ramp quickly, to 12.9 million next year and 27 million in 2012. For comparison, there were more than 210 million TVs sold worldwide year.

Sony Corp. said Tuesday it will start selling 3-D televisions in June. U.S. prices were not revealed, but the sets will cost $3,200 and up in Japan. The company hopes that 10 percent of the TVs it sells in the next fiscal year will be 3-D units.

Sony also plans to issue software upgrades for its PlayStation 3 game consoles and some of its Blu-ray players so they will be able to play 3-D discs.

Panasonic has not revealed what its sets will cost. It's taking a slightly different tack than Samsung, by introducing 3-D only on plasma screens, for maximum image quality. And rather than selling 3-D sets broadly, it's going only through Best Buy Inc.'s Magnolia Home Theater stores.

Samsung's two new sets will be followed by another 13 3-D-capable models in the next two months. Soon, 3-D packages with plasma sets will be available for about $2,000, Baxter said.

ISuppli analyst Randy Lawson said it's a fairly simple, inexpensive move for manufacturers to modify their high-end sets to be 3-D-capable. That's part of the reason iSuppli expects a quick increase in sales of such 3-D TVs. Whether people will use the feature is another matter, he said.

Consumers should be more interested in the ability to connect the TV to the Internet, Lawson said. That feature, which started showing up last year and requires little more technology on a daily basis than a good TV remote control battery, is more immediately useful, because it gives access to a vast array of online movies and TV shows.

"I don't believe that everyone will be watching 3-D all the time in two to three years," he said. "I don't think it will be a predominant" concern among average consumers.

Panasonic Announces New Battery Technology For Laptop Computers

Bloomberg

We all remember the massive battery recalls that happened in 2007. Batteries from several computer makers were recalled after several of the batteries in computers overheated and caught on fire. Panasonic has announced a new battery that is safer and has more capacity than previous battery types.

Panasonic Corp. has developed a lithium-ion battery that has 10 percent more capacity than its most recent model introduced last week, two people familiar with the product said.

Osaka-based Panasonic increased the lithium-ion battery’s capacity to at least 3.4 amperes per hour, the people said, asking not to be identified before the company announces the product on Dec. 25.

The consumer electronics maker said on Dec. 18 it began mass production of a 3.1 amperes per hour rechargeable lithium- ion battery suitable for laptops. Panasonic estimates the global market for such batteries will increase fivefold from this year to 3.2 trillion yen ($35 billion) in 2018, driven by expansion of low-emission vehicles and mobile electronics.

The company, which this month completed the takeover of Sanyo Electric Co., the world’s biggest maker of rechargeable batteries, plans to invest 123 billion yen to triple production of lithium-ion batteries for laptops and notebooks by October 2011 to maintain a lead over South Korea’s Samsung SDI Co. and other rivals.

As Yen Strengthens, Panasonic Prepares to Release More Employees

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.