Japanese tech giants Panasonic and Sony are following different paths to profitability, with mixed results. Both companies are moving away from some consumer products like televisions and flat-panel displays. But whereas Panasonic will emphasize other tech-related endeavors such as lithium ion batteries and automotive-related businesses (selling batteries to Tesla, for example), Sony is moving into the real-estate brokerage business.
Panasonic said it expects its net profit will rise 16% for the fiscal year ending March 2015, according to the Wall Street Journal. As the Journal states, “Over the past year, Panasonic surprised investors with the speed of its turnaround measures, even as rivals such as Sony Corp. continued to be under pressure from falling demand for televisions and personal computers.”
Warwick Business School Associate Professor of Strategic Management Sotirios Paroutis, who has researched Panasonic, issued this statement on Monday:
“Panasonic has been implementing its turnaround strategy at an impressive pace, but this is not an easy ride.
“Pulling out of nonprofitable consumer electronics businesses—some of them synonymous with the Panasonic brand name like the plasma display panels—has helped the firm readjust its portfolio towards automotive and housing products with stronger demand.
“Also it has been launching a series of new cameras and camcorders that have proven popular with consumers.
“A weak yen and an increased domestic demand for housing products has boosted revenues and helped the firm achieve a 16% net profit rise. Both effects from the exchange rate and domestic demand are likely to ease in the next few months, so the question is whether Panasonic has done enough to keep performing well.
“Keeping up with the pace of innovation investments plus acquisitions and partnerships in the automotive and housing areas is the next challenge for Panasonic.
“The early signs are positive, as the company has extended its contract for supply of lithium-ion batteries to Tesla, and there are discussions for a major factory jointly with Tesla.”
A Wall Street Journal blog post discusses Sony's move into real estate. According to that post, the company carries out “internal auditions or contests” every three months—the real-estate idea resulted from this process. Nevertheless, says the blog post, fixing Sony's consumer-electronics business remains a priority.