How to Lose $10 billion in one year

When

President Fumio Ohtsubo stood in front of the press on Friday and announced the company's forecast loss of 780 billion yen ($10.24 billion), he cut a forlorn figure. Obviously a very proud man, he did not try to hide from the firing line when he said, "I feel the responsibility for the huge amount." Yet the blame does not lie squarely at his door. Yes, as the President the buck stops with Ohtsubo. But his is a business littered with flailing giants. Both Sony

and Sharp

are barely managing to keep their heads above the water. Japanese TV businesses are fighting to survive. According to

, the forecasted loss dwarfs expectations and is almost entirely due to restructuring charges and writedowns for its Sanyo Electric Unit. Still, no matter how down Ohtsubo is about the loss and his own sense of responsibility, he is showing no signs of stepping aside. If there is to be a new man at the helm of PC, Ohtsubo will have to be pushed because he sure isn't going to jump. "We will accelerate our profit structure reform and make sure we achieve a V-shaped performance improvement in the next business year," Ohtsubo told reporters instead. Between the three of them, Panasonic, Sharp and Sony expect to lose $17 billion this year, thanks in no small part to foreign rivals like South Korea's Samsung, weak demand and a strong yen. January saw Bank of America Merrill Lynch downgrade Panasonic to Neutral from Buy, stating in the report that, “We had recommended Panasonic mainly given its international competitiveness in home appliances, but now downgrade our rating as (1) the deteriorating environment will put pressure on display biz earnings, (2) the measures being taken in this biz are essentially defensive and we expect losses to increase, (3) we see no signs of measures to promote earnings growth in cash-cow segments, and (4) overall, the firm's response seems to be slow.” BOA also admitted that rebuilding PC's display segment will take time, saying, “Recent decisions such as entry into ELTV from 2013 and conversion of the panel plants to make medium and small-scale panels appear essentially defensive, and we believe that the speed of decision making has been slower vs. some rivals. We think there is a strong possibility that the return to profit will be the longest delayed of all the big three consumer electrical makers, and we expect the scale of losses to be larger than initially forecast.” With PC trimming its forecast for the number of flat-screen TVs it will sell by 1 million to 18 million sets, Yuuki Sakurai, CEO and President of Fukoku Capital, echoed BOA's concerns. “They don't seem like a company that's progressing towards a particular goal,” he said. “What exactly is this company good at? What does it want to do? They don't have answers to these questions." Despite having to lose a full 17,000 jobs by the end of March and diving to a loss of 197.6 billion yen from a profit a year earlier, Ohtsubo maintains that he will not ditch the TV business. "I don't think it's a business that has lost its growth potential," he said. One thing is for sure though – if Panasonic is to see any of that growth potential in the near future, something has to change and fast. On Friday, PC was trading at $7.86, down $0.27, or 3.32 percent. To compare, Sharp is trading at $6.75, down $0.67 or 9.03 percent. Sony is trading at $17.09, down $1.10 or 6.05 percent.