'Tablet boom driving Panasonic display unit back to profit'

Nov 15 2012, 13:46 IST
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SummarySmall LCD panels will likely make up around 60 percent of the unit's sales in the six months.

Panasonic Corp's display business is on track for its first profit in five years in January-March, driven by stronger sales of liquid crystal display (LCD) panels for tablets and PCs, the head of the division said in an interview on Thursday.

As Panasonic draws back from money-losing TVs - it makes the Viera TV brand - it's looking to boost sales of smaller LCD panels used in tablets and mobile phones, a strategy also being pursued by rival Sharp Corp.

Panasonic, Sharp and Sony Corp have been battered by declining TV sales and a strong yen that makes their products look expensive when lined up against innovative designs from South Korean competitors and others. Panasonic has warned it will lose close to $10 billion this year as it writes off tax deferred assets and goodwill across businesses and prepares for a restructuring. Finance chief Hideaki Kawai told Reuters on Wednesday that a fifth of Panasonic's 88 business units are losing money and only half meet a 5 percent operating margin target.

Small LCD panels will likely make up around 60 percent of the unit's sales in the six months to March, double their first-half contribution, Yoshio Ito said.

We are now making displays for more than 10 models of tablets and PCs, he said in an interview at a former factory in Ibaraki in western Japan, once the hub of TV production and now his headquarters and a research and development centre.

Making money again from LCD panels will help cover continued losses from plasma displays, which are difficult to make in smaller sizes, Ito said, adding the plasma part of the business would still lose money in January-March.

It's a very bullish target, said Yasuo Nakane, an analyst at Deutsche Securities in Tokyo, in reaction to the LCD profit pledge.

Ito and other Panasonic managers are under pressure from new company president Kazuhiro Tsuga to raise their game. Tsuga has said that any division failing to hit at least the 5 percent operating margin target within three years will be shut or sold. From April, Tsuga will begin weeding out the weakest among Panasonic's businesses - which churn out a vast range of goods from fridges and shavers to solar panels and batteries.

The success of tablets from Apple Inc's iPad and Samsung Electronics' Tab to more recent offerings from Google Inc, Amazon.Com Inc and Microsoft Corp has created room for Panasonic's display business to decouple

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