Panasonic camera division in danger?
Disclaimer: I have no idea if Panasonic's camera division is currently making or losing money.
You know what? CEO Tsuga doesn't know either. In large Japanese firms, the purpose of corporate accounting is to keep senior management and shareholders dazed and unable to tell profit from loss.
Panasonic's camera business is nestled in its huge Digital AVC Networks divisions, which encompasses, according to its annual report:
Plasma and LCD TVs, Blu-ray Disc and DVD recorders, camcorders, digital cameras, personal and home audio equipment, SD Memory Cards and other recordable media,
optical pickup and other electro-optic devices, PCs, optical disc drives, multi-function printers, telephones, mobile phones, facsimile equipment, broadcast- and business-use AV equipment, communications network-related equipment, traffic-related
systems, car AVC equipment, healthcare equipment, etc.
That's about as diverse as the Bronx Zoo and Botanical Garden rolled into one.
The report does not break out the sub-segments much, other than to say that in 2011:
Digital AVC Networks sales decreased 3% to 3,304 billion yen, compared with 3,410 billion yen in the previous year. Despite favorable sales of Blu-ray Disc recorders, this result was due mainly to sales declines in mobile phones and digital cameras.
This is drivel. Although I burn a few Blu-rays, I had no idea Panasonic was selling dedicated recorders, and the quantity certainly can't be material compared to TVs or phones! But it does say that phone AND camera sales declined. Will Panasonic wisely terminate cell phone manufactures altogether? Very likely, Tsuga will simply say that they will redouble and rationalize the segment, but be fuzzy on details.
The company adds:
With respect to this segment, segment profit increased by 32% to 115 billion yen from 87 billion yen, mainly as a result of fixed cost reduction and streamlining efforts, offsetting the impact of a sales decline and the yen appreciation.
An increase in segment results is nothing to begrudge. But it appears to owe to cost cuts and not new products.
The modest 2.7% return on equity for the year was dwarfed by negative currency adjustments, which don't pass through the income statement but reduced shareholder worth. In other words, appreciation of the yen against currencies of places where Panasonic has outsourced operations more than ate up the cost savings accrued throught the income statement.
Perhaps the "good news" is that it will be years before Tsuga or his successor figure out how to make sustained profits, so maybe the firm will continue to roll out new cameras for a while.