Shares in Japan's Panasonic Corp tumbled nearly 9% after the Japanese electronics maker's bigger-than-expected loss forecast triggered some brokerages to cut their ratings on the stock.
Earnings at the company, which vies with Sony Corp for the title of the world's largest consumer electronics maker, have evaporated as the global economic crisis cuts sales of flat TVs and digital cameras.
Panasonic, the world's No.1 plasma TV maker ahead of Samsung Electronics, said it expected a net loss of ¥195 billion ($2 billion) for the year to March, 86% larger than a consensus in a poll of 17 analysts by Thomson Reuters.
It would be about half the size of the ¥378.96 billion loss it posted a year earlier. Like many other Japanese companies, it has suffered an additional blow as a stronger yen has cut profits on products sold overseas.
“We think that improvement in the operating environment will take time,” Nikko Citi analyst Kota Ezawa said in a note to clients, adding Panasonic also faces risks from write-downs on equities and fixed assets.
He also said a planned purchase of Sanyo Electric would hurt its balance sheet, as he cut his rating on Panasonic shares to “Sell/High Risk” from “Hold/High Risk.”
Nomura Securities also downgraded the stock, to “Neutral” from “Buy.”
Panasonic shares were down 7.4% at ¥1,348 in the early afternoon after falling as much as 8.8%, underperforming a 4% fall in Tokyo's electrical machinery index.
Some industry specialists, however, chose to focus on Panasonic's midterm growth potential, rather than near-term concerns such as the larger-than-expected net loss forecast this year.
Credit Suisse analyst Koya Tabata raised his target price for Panasonic to ¥1,600 from ¥1,400 while maintaining an “outperform” rating.
“Assuming there will be a V-shaped recovery in the medium to long term, we regard now as a good time to accumulate shares,” Tabata wrote in a note to clients dated Friday.
“We believe Panasonic set the stage for growth by expanding its market share in the new low-end market.”
With a potential customer base growing in emerging markets and more consumers moving downmarket in industrialized nations, Panasonic plans to put more resources on developing and marketing lower-end products, Panasonic President Fumio Ohtsubo said on Friday.
Mizuho Investors Securities analyst Nobuo Kurahashi said Panasonic has a wide range of businesses that could drive its midterm growth such as green energy and overseas white goods operations, while it is unclear how Sony's focus on networked electronics will help boost its earnings.
Panasonic plans to spend up to ¥800 billion to buy Sanyo, the world's largest maker of rechargeable batteries used in PCs, cellphones and hybrid cars, while Sony aims to make 90% of its electronics products network-enabled and wireless-capable.
Sony, maker of PlayStation games and Cyber-shot digital cameras, expects a net loss of ¥120 billion this year after having posted a ¥98.9 billion loss a year earlier. (Reuters)