Great informative post that was in GAF about the state of Japanese electonic giants
'' Sharp = Dead
Sony are probably going to be fine. They are profitable and once their tax situation is normalised I don't see them having a problem. The reason they are fine is that in 2008 they slimmed down their Japanese operation by around 30,000 and their international operation by the same figure, they then went on to shed another 10,000 Japan based jobs after the Tsunami. In pure numbers, Sony now employ under half the number of Japanese employees than they did in 2007.
Not only that but they also have a profitable finance and insurance division which brings in around $1bn per year, so if things got really desperate they could spin it off and cash in around $12bn to clear debt and invest. Right now they don't need to do that. Next, Sony are in fast growing areas of business, they were recently confirmed as the third largest smartphone player by shipments, overtaking Motorola, HTC, RIM and Nokia. They have also recently entered the highly profitable medical technology field with the world's second largest player, Olympus. Sony and Olympus have opened a joint venture in which Sony hold an option to buy from Olympus at any time of their choosing after 2015 at market price.
Where Sony are weak, TVs, Laptops and tablets. Of these tablets are the most essential for Sony to break into, the Xperia Tablet S was very well received, but then they recalled it and it has hurt their reputation and sales, they should still go on to ship around 2m WW this year which is a good base to work from.
The TV division lost just ¥10bn in the first half of the year, this is down from around ¥40bn, so Kaz has stemmed the major bleeding in the division, some analysts believe that if 2013/14 is not profitable for Sony in TVs they will exit the market. This move alone will cause a massive rise in their share price as the TV division is seen as the biggest money loser (around $9bn since 2004). If they can make it work with premium screens such as the 84" 4K (which has sold through it's first and second production shipments) and new technology such as CLED and OLED, then I they have a good shot at overhauling Samsung.
On Laptops, it is difficult to say what Sony should do with the Vaio division, some say they should just turn it into a high end tablet brand for Windows 8 with professional oriented feature sets (12bit screens, Wacom pen input, ships with Photoshop or other professional creative software) or shitcan it altogether. I think eventually they will go for the former and produce high margin professional products and give up on being a volume player as there is no money in it for a company that pays 10x the going rate for manufacturing (Japan vs China manufacturing costs).
Panasonic are in a very difficult position, they are losing scads of money on TVs, their ill advised investment in Sanyo and on smartphones. However, they have a lot of cash in the bank and could turn it around yet. On TVs, expect 2013 to be the last year in which Panasonic make Plasma screen TVs, production is too expensive and prices are too low. One of our analysts said that for 2011 and 2012 Pansonic had just 3 profitable TVs, all others were sold at or below their cost to produce and ship, they had around 50 separate SKUs.
If Panasonic can make their joint venture with Sony work for OLED expect them to stay in the market, however, their better capitalised Korean competitors have not been able to, so at this point I remain sceptical that OLED can ever be productised for large screen TVs. Sony are the only company who have OLED screens on sale, they cost around $17,000-25,000 for 17-24" broadcast quality screens. Even with a regular consumer mark up it puts OLED at around $10k for 24" on current technology. The reason Samsung and LG have delayed OLED to 2013 is because they can't get 55" under $12k and remain profitable. LG are going to ship 500 OLED TVs in 2012 to meet investor targets and all will all be sold below cost of production at over $10k per piece. It just shows the scale of the problem manufacturers are facing with large screen OLED production. It is just too much and too error prone. Panasonic have spent a lot of money capitalising a JV with Sony who are providing no money and technological expertise, if it fails then I will fear for the future of Panasonic.
Next, they still have to write down more goodwill from their Sanyo purchase, however that money has already been spent, so it will not affect their cash balance. It will however put a lot of pressure on the board as they made that idiotic decision to invest a lot of money in a sector that the Chinese were so clearly going to dominate.
Finally, they also entered the smartphone market with their "Eluga" line up. It was well received in the countries it came out in, but there lies the problem - it was only released in small quantities but they produced millions of the bloody things causing a massive stock write down as so many units went unsold (look at THQ to see where this leads). The company has now exited the smartphone market so at least this mistake won't be repeated.
On their strengths, they still have a good market presence in compact and mirrorless cameras, but they are under a lot of pressure from Sony, Olympus and more recently Canon. Their OLED light panels are pretty popular in Japan, but more as a party trick than anything else and it is a joint venture.
This is a rundown of the companies in question. Of the three Sony are clearly in the strongest position going forwards because of their action in 2008 to reduce Japanese production capacity and employment while also being competitive in growing markets like smartphones and medical tech as well as being very strong in image sensors and cameras.''
