Japan's electronics giants suffered another dreadful earnings season with Panasonic and Sharp saying they lost a combined USD 12.8 billion last year as they scramble to staunch the bleeding.
Rival Sony emerged as a bright spot, saying it had turned a profit after four years in the red, but its jump back into the black was largely due to fluctuations in the value of the yen and gains from a string of asset sales -- including unloading its Manhattan office building for more than USD 1.0 billion.
Underlining the industry's desperation, Sony chief financial officer Masaru Kato told reporters last week that years of losses had left management with one mission. "We were determined to report a profit no matter what," he said.
But the one-time market leader's television and electronics business continues to struggle, a plight shared by its domestic competitors as they compete against the likes of Apple and South Korea's Samsung Electronics.
The sector has been hammered by credit rating downgrades and is awash with record losses as its struggles in the low-margin TV business where foreign rivals have proved tough competition.
Sharp, which said Friday it lost 545.3 billion yen (USD 5.4 billion at current exchange rates) in the year to March, its worst-ever shortfall, warned that television sales "fell drastically" over the latest fiscal year.
The maker of Aquos-brand electronics blamed the downturn on sluggish demand at home and in key market China, where a consumer boycott of Japanese brands erupted last year over a territorial spat between Beijing and Tokyo.
The diplomatic dispute has weighed on a slew of other Japanese firms, including the country's still hugely profitable automakers.
Slowing demand in key export markets, strategic mistakes and a strong yen have also pounded the electronics sector, forcing firms to launch wide-ranging and expensive restructuring plans to turn around their ailing businesses.
"But they could plunge back into the danger zone if they don't change their product portfolio or focus enough on their strengths over the next few years," said Koki Shiraishi, an analyst with SMBC Nikko Securities.
"Their South Korean and Chinese rivals are getting stronger so the challenges are real. Japanese firms have taken drastic measures but their actions were too late."
Analysts have long been urging firms such as Sony to axe money-losing divisions, but the industry has been wary of slicing up vast businesses which often include household staples such as washing machines and refrigerators.
