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Sony, Panasonic and Sharp TV divisions melting down in summer 2012 heat

post #1 of 149
8/2/12 at 12:36pm
Thread Starter 
So, no matter how you slice it, the continued slow death march of Japan Inc. in the TV business remained apparently in their first fiscal quarters recently ended. How bad? Well, it's hard to tell but I'll link some source material and quote the very little they had to say on the matter.

Sharp
http://uk.reuters.com/article/2012/08/02/us-sharp-earnings-idUKBRE87109A20120802
... as waning TV demand and an overcapacity at its main liquid crystal display plant continued to weigh on earnings.

The company is considering major layoffs for the first time ever.

Panasonic
http://panasonic.co.jp/corp/news/official.data/data.dir/2012/07/en120731-4/en120731-4-8.pdf
...the home electronics market, especially flat-panel TVs, continues to be very difficult.

That division was down 20% year over year despite it including positive growth in segments like computers (Panasonic groups those segments together under AVC networks). No way to show any positive spin here.

Sony
http://www.sony.net/SonyInfo/IR/financial/fr/12q1_sony.pdf
In Televisions, sales decreased 35.0% year-on-year...

Pretty much speaks for itself.

It's worth noting that once upon a time American companies made most of the TVs sold in America and it would have been really hard to fathom that coming to an end. And then it did. Those companies are gone (although a couple of the brand names live in as they are licensed by other people because Americans still remember them). It's safe to conclude that there is no chance all of the great Japanese brands will still be in the TV business by decade's end. You've seen Pioneer leave the market. You've seen Toshiba all but leave the market. I have no real idea who is next or when, but all of the above-three companies are diversified businesses (even Sharp to an extent, although the least so). Letting the company die trying to execute a turnaround in TV that is probably not going to happen seems unlikely.

On a very loosely related aside, while I couldn't find a link to the Sharp financials, one thing that's clear is this: As of a few weeks ago, Sharp was also looking at 20% TV sales declines ("The company expects TV sales this business year to drop by 19 percent to 10 million..." -- Reuters, 7/23/12) and appears to have hit that. There is no significant uptick in demand for their giant TVs. That doesn't mean they aren't outselling the numbers from last year (I'd imagine they are), but they aren't outselling them by any kind of number suggesting that owning this market is a savior. A lot of people criticized posters (notably irkuck) for raising this point, but even as the average retail price of those TVs has dropped, the sales numbers have moved up only slightly. This suggests a significant number of last year's sales went to pent-up demand and sustained demand is really quite low at this point. In 2011, the 70" segment ran at about 0.1% of the market on a unit basis. It does not appear based on these Sharp numbers that it is poised to come anywhere near a double in 2012. If it had, it would be hard for Sharp TV sales to be down so extremely.
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post #2 of 149
8/2/12 at 12:55pm
Panasonic was actually able to post a profit. Sales are indeed slowing in all categories, except the large panel segment. Many things contributing. Bad world economy, the switch over to HD is pretty much over, Chinese competition using slave labor leading to slimmer margins, etc. It is not all doom and gloom though. A lot of new tech coming soon such as OLED, 4K, Crystal LCD, large format 80-110", etc. That should give the industry a mild bump in the next 2-3 years, but the Japanese are going to have to innovate and be on the cutting edge of new tech to be able to compete with the Koreans and Chinese.

http://www.engadget.com/2012/07/31/panasonic-q1-2013/
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post #3 of 149
8/2/12 at 3:10pm
Thread Starter 
Quote:
Originally Posted by sytech 
Panasonic was actually able to post a profit.

The TV division was an anchor. Take that away, and their net profit would've been decent for a world in a global slow-growth phase. How much longer do you think they are going to keep fighting a losing battle? As they dabble in a half-hearted joint venture on OLED with Sony, Korea Inc, is building fabs to kill off LCD TVs with OLEDs... I just don't know how long this persists, but the future is not bright.
Quote:
Sales are indeed slowing in all categories, except the large panel segment. Many things contributing. Bad world economy, the switch over to HD is pretty much over, Chinese competition using slave labor leading to slimmer margins, etc. It is not all doom and gloom though. A lot of new tech coming soon such as OLED, 4K, Crystal LCD, large format 80-110", etc. That should give the industry a mild bump in the next 2-3 years, but the Japanese are going to have to innovate and be on the cutting edge of new tech to be able to compete with the Koreans and Chinese.

My larger point here was, yes, the Koreans and Chinese will be around. The Japanese? It seems doubtful. I don't believe any of the categories you mentioned will give the industry any kind of bump at all, by the way. I think at best they will allow for the treading of water. The TV business is in a secular decline because most everyone who wants an HDTV has one and no efforts by anyone have meaningfully shortened the upgrade cycle (except for the obvious declines in build quality and therefore longevity... oh, the irony). The growth of Chinese TV markers will not lead to fancy, high-end models, either.
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post #4 of 149
8/2/12 at 9:22pm
Sharp LCD TV units were down almost 50% YoY. Besides all of the obvious structural problems at the Japanese vendors, the strong yen is just killing these companies.

http://sharp-world.com/corporate/ir/library/financial/pdf/2013/4/1303_1Q_Presentation.pdf
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post #5 of 149
8/3/12 at 1:11am
Thread Starter 
Quote:
Originally Posted by slacker711 View Post

Sharp LCD TV units were down almost 50% YoY. Besides all of the obvious structural problems at the Japanese vendors, the strong yen is just killing these companies.
http://sharp-world.com/corporate/ir/library/financial/pdf/2013/4/1303_1Q_Presentation.pdf

Certainly a good point on the yen. It hurts the financial performance badly. But realistically, the U.S. retail prices of the Sharp and Panasonic TVs are competitive, despite the strong yen, so that's not what's killing them on unit sales. Now, I realize the U.S. is not the only market, but obviously the strong yen isn't killing them domestically either. It seems like domestic Japanese demand for TVs is absolutely off a cliff. I suspect that's a harbinger for the U.S. as they are deeper into the HD era.

Also, looking at that IR presentation, I suspect -- again -- that the 70" segment is going to be up insignificantly from 2011 to 2012. First of all, Sharp is going to sell 500,000 fewer TVs year on year. Second of all, they are claiming the growth is coming in emerging markets -- not a place many 70s are going to sell. Third of all, the cratering of sales as measured in yen does not suggest a move toward models with higher ASPs; it suggests the opposite if anything.
Edited by rogo - 8/3/12 at 1:19am
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post #6 of 149
8/3/12 at 4:57am
Get your Elites while they last folks!
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post #7 of 149
8/3/12 at 6:36am
It really all depends how Panasonic, Sony and Sharp will do in the OLED circus, till then they remain in the TV-business.
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post #8 of 149
8/3/12 at 8:36am
I don't think a strong yen is as bad for business as it used to be. Most of the TVs aren't made in Japan and the components don't come from Japan. The only real downside is converting profits back into Yen, but since there are no profits to convert, it actually makes the losses lower.

I think the real problem is there are too many companies making TVs.
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post #9 of 149
8/3/12 at 1:55pm
Thread Starter 
Quote:
Originally Posted by 8mile13 View Post

It really all depends how Panasonic, Sony and Sharp will do in the OLED circus, till then they remain in the TV-business.

Thing is, Sharp isn't even starting yet. Sony and Panasonic are several years behind LG and Samsung. And their joint venture isn't even a manufacturing one. It's a plan to figure out ways to manufacture them. Hard to get excited over that.
Quote:
Originally Posted by KidHorn View Post

I don't think a strong yen is as bad for business as it used to be. Most of the TVs aren't made in Japan and the components don't come from Japan. The only real downside is converting profits back into Yen, but since there are no profits to convert, it actually makes the losses lower.
I think the real problem is there are too many companies making TVs.

Yes, you are correct on yen profitability to a point. But Sharp and Panasonic make more or less 100% of their panels in Japan proper and a lot of the semiconductors in them come from Japan. The glass comes from Japan.

Your last sentence is spot on, especially given a flat/shrinking market.
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post #10 of 149
8/3/12 at 2:48pm
Quote:
Originally Posted by rogo 

Thing is, Sharp isn't even starting yet. Sony and Panasonic are several years behind LG and Samsung. And their joint venture isn't even a manufacturing one. It's a plan to figure out ways to manufacture them. Hard to get excited over that.
that is the immidiate future.

btw i do not see a future where 90% of OLEDs in the store will be Samsung and LG, no, the store will offer a mix of brands (like they always do) the moment they are available. Everybody will make some losses/.profits

What i mean by OLED circus is the moment when there are a lot of brands OLED TVs in the store. Sony, Panasonic and Sharp will be a part of that circus, at least for some years, i am shure of that. They cannot quit now, they must wait and see if they can make some OLEDmoney.
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post #11 of 149
8/3/12 at 11:38pm
Thread Starter 
Quote:
Originally Posted by 8mile13 View Post

that is the immidiate future.
btw i do not see a future where 90% of OLEDs in the store will be Samsung and LG, no, the store will offer a mix of brands (like they always do) the moment they are available. Everybody will make some losses/.profits
What i mean by OLED circus is the moment when there are a lot of brands OLED TVs in the store. Sony, Panasonic and Sharp will be a part of that circus, at least for some years, i am shure of that. They cannot quit now, they must wait and see if they can make some OLEDmoney.

They may not have a choice. They currently have (a) no capability to manufacture any OLEDs (b) no clear path to invest capital to develop OLED manufacturing capability. It is simply not a given any of those companies will be playing in the OLED realm. I'm not saying they definitively won't; but it's simply not a given.
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post #12 of 149
8/7/12 at 12:12pm
Asian capitalism doesn't seem to respect intellectual property. One asian company reaps profit by stealing some other asian company's research. Then they have the profit to inovate, and then they become victems of another asian company copying them. It never ends. This started with the Japanese copying American products. Until this is fixed, it will always be a boom-bust cycle. We consumers aid and abet this by buying stolen intelectual property. It never ends.
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post #13 of 149
8/7/12 at 6:47pm
Quote:
Originally Posted by Tazishere View Post

Asian capitalism doesn't seem to respect intellectual property. One asian company reaps profit by stealing some other asian company's research. Then they have the profit to inovate, and then they become victems of another asian company copying them. It never ends. This started with the Japanese copying American products. Until this is fixed, it will always be a boom-bust cycle. We consumers aid and abet this by buying stolen intelectual property. It never ends.

reminds me of the early 70s when I first started working on Toyotas. Virtually every mechanical part had "GM Pat. #xxxxxxxxxxxxx" stamped on it.
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post #14 of 149
8/8/12 at 4:21am
Quote:
Originally Posted by Tazishere View Post

Asian capitalism doesn't seem to respect intellectual property. One asian company reaps profit by stealing some other asian company's research. Then they have the profit to inovate, and then they become victems of another asian company copying them. It never ends. This started with the Japanese copying American products. Until this is fixed, it will always be a boom-bust cycle. We consumers aid and abet this by buying stolen intelectual property. It never ends.

How in the world would any consumer know that the equipment they are purchasing has any stolen patents incorporated into it?
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post #15 of 149
8/9/12 at 9:57am
Why is it that trillion dollar cars are produced and sold and companies don't go out of business doing so but the same thing doesn't happen with TVs?

Is it just that there are people that will buy trillion dollar cars but hardly anyone will spend more for a state of the art TV?

This thread is depressing--it appears like we're doomed to inferior television.

Muscle cars peaked in 1970. Most people here would say that TVs peaked quality wise with the Pioneer Kuro sets.

By 1974 car performance was in the toilet.

Will we have to wait as many years for TV performance to return as we did for car performance to outdo 1970?
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post #16 of 149
8/9/12 at 11:55am
Quote:
Originally Posted by Artwood View Post

Why is it that trillion dollar cars are produced and sold and companies don't go out of business doing so but the same thing doesn't happen with TVs?
Is it just that there are people that will buy trillion dollar cars but hardly anyone will spend more for a state of the art TV?
This thread is depressing--it appears like we're doomed to inferior television.
Muscle cars peaked in 1970. Most people here would say that TVs peaked quality wise with the Pioneer Kuro sets.
By 1974 car performance was in the toilet.
Will we have to wait as many years for TV performance to return as we did for car performance to outdo 1970?

Because exotics like Ferrarri, Lambo, Bugatti Veyron, etc. are actually owned by Fiat, Audi, and VW (respectively). Profits from lower end bread and butter models sold in high volume are subsidizing R&D costs on exoticars. Toyota can take a huge loss on every one of their new Lexus exoticars because they sell lotsa Corollas.

I'm as fond of the old muscle cars as anybody, but one can walk into any number of dealerships right now and drive out in something that out-accelerates the best of them, gets reasonable cruising fuel economy, and actually goes around corners for less money allowing for inflation.

I think you're right about public willingness to pay for premium quality televisions, it's just not there vs cars. Maybe because you can't park a tv on your driveway to impress the neighbors.

Rogo would know better than I whether Sony, Panasonic, and Sharp are making enough money in other areas to continue to subsidize R&D in thier tv divisions. Matsushita, Panasonic's parent, makes everything from led lighting to compressors for fridges, Sony owns a movie studio and has revenue streams from video gaming. Sharp makes a helluva microwave oven.
Edited by Steve S - 8/9/12 at 12:01pm
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post #17 of 149
8/9/12 at 11:39pm
Thread Starter 
Quote:
Originally Posted by Artwood View Post

Why is it that trillion dollar cars are produced and sold and companies don't go out of business doing so but the same thing doesn't happen with TVs?
Is it just that there are people that will buy trillion dollar cars but hardly anyone will spend more for a state of the art TV?
This thread is depressing--it appears like we're doomed to inferior television.
Muscle cars peaked in 1970. Most people here would say that TVs peaked quality wise with the Pioneer Kuro sets.
By 1974 car performance was in the toilet.
Will we have to wait as many years for TV performance to return as we did for car performance to outdo 1970?

If you buy a "trillion-dollar car" you get to drive it on public streets and have people go "ooooooooooooooooooooooooooooooh". There is nothing like seeing the reaction of other people to a Ferrari or Lamborghini, never mind a Bugatti. People are in awe. When you can own -- and experience -- something that puts others genuinely in awe, it's worth hundreds of thousands (or even $2 million in the case of the pricey Bugatti) to own. And, really, while few people ever get to truly drop the hammer on one of those cars even if they do own it, you know as the owner it's like nothing else out there. The psychic benefits are real, even if they are ethereal.

All of that stuff in video is harder to feel, harder to make others feel, and experienced by fewer people. Still, there are multi-million-dollar home theaters, Runco and B&O flatscreens, etc. It's not like that market doesn't exist. What it lacks, really, is a BMW/M-B/Audi/Lexus tier....
Quote:
Originally Posted by Steve S View Post

Because exotics like Ferrarri, Lambo, Bugatti Veyron, etc. are actually owned by Fiat, Audi, and VW (respectively). Profits from lower end bread and butter models sold in high volume are subsidizing R&D costs on exoticars. Toyota can take a huge loss on every one of their new Lexus exoticars because they sell lotsa Corollas.
I'm as fond of the old muscle cars as anybody, but one can walk into any number of dealerships right now and drive out in something that out-accelerates the best of them, gets reasonable cruising fuel economy, and actually goes around corners for less money allowing for inflation.
I think you're right about public willingness to pay for premium quality televisions, it's just not there vs cars. Maybe because you can't park a tv on your driveway to impress the neighbors.

[ /nods head in violent agreement]
Quote:
Rogo would know better than I whether Sony, Panasonic, and Sharp are making enough money in other areas to continue to subsidize R&D in thier tv divisions. Matsushita, Panasonic's parent, makes everything from led lighting to compressors for fridges, Sony owns a movie studio and has revenue streams from video gaming. Sharp makes a helluva microwave oven.

You know the best way to make a small fortune? Start with a large fortune and set some of it on fire....

The problem is you can't subsidize R&D in a TV division that overall keeps losing a ton of money. Sony could afford to invest money in TV R&D. They just really haven't for more than a decade. Sure, someone is now going to chime in and claim they do, but it's a fiction. Sony hasn't been a primary maker of panels in PDP or LCD since the middle 1990s (yes, they make some LCDs... no, virtually none of those are used in the vast majority of their TVs). They have invested a pittance in OLED while Samsung and LG have invested billions. It becomes a self-fulfilling prophecy that they have a money-losing TV division that they then don't want to invest money in.... Matsushita bet on mainstreaming plasma and basically ran into a brick wall of gigantic over-investment in LCD which led to incredible price reductions and an inevitable victory for LCD. Forget Sharp... they have two main businesses, both of which have been slammed by the high yen and brutal competition from mainland Asia... It's not all doom and gloom.. Any one of the three can come back, but it's not going to be easy.
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post #18 of 149
8/10/12 at 5:12pm
Plenty of market for ultra exclusive video product.
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post #19 of 149
8/11/12 at 7:59pm
Thread Starter 
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Originally Posted by David_B View Post

Plenty of market for ultra exclusive video product.

.... in projectors, sort of.

In flat panels, barely.

Otherwise, there'd be, well, exclusive video product. Compared to the sheer variety of exclusive auto product, there is next to nothing in video.
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post #20 of 149
8/12/12 at 3:28am
Quote:
Originally Posted by rogo View Post

.... in projectors, sort of.
In flat panels, barely.
Otherwise, there'd be, well, exclusive video product. Compared to the sheer variety of exclusive auto product, there is next to nothing in video.

One thing I don't understand is simply this: If all those tv manufacturers are losing money every time they sell a tv, why do they continue to sell tvs? Or put another way, why do they continue to sell tvs at a loss rather than to raise the price of their tv to where they can make a profit?
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post #21 of 149
8/12/12 at 5:16am
Why not ask Pioneer? wink.gif Said manufs would have to follow higher prices with scaled back production due to reduced demand and subsequent layoffs...it could create its own downward spiral effect. Maybe there's a middle ground that could be obtained with a minimal price hike, but that may not end up amounting to more than a reduction in losses or breaking even (if lucky). It's a good thing all these companies have diversified product offerings, otherwise many may have exited the business already.
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post #22 of 149
8/12/12 at 1:48pm
Thread Starter 
Quote:
Originally Posted by pds3 View Post

One thing I don't understand is simply this: If all those tv manufacturers are losing money every time they sell a tv, why do they continue to sell tvs? Or put another way, why do they continue to sell tvs at a loss rather than to raise the price of their tv to where they can make a profit?

They can't raise prices. There are too many less-expensive models that can be sold at a small-but-real profit. And since panels are a commodity sourceable from Taiwan or Korea (or even Japan) there is not stopping the supply of TVs.

Why do they stay in a TV business that they are losing money at? That's a different question. Pride, hope for a turnaround, delusion, history, insert-idea-here....
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post #23 of 149
8/12/12 at 6:49pm
No one is going to be able to compete with China on price and their quality keeps increasing. The only way to stay in the display business to push new tech that the Chinese do not have an advantage in, or for the Japanese to subcontract out the work to the government owned Chinese factories, or have their own government help subsidize production costs to help keep the jobs in Japan. In the end the Japanese government might bailout out the tech industry, like we did the domestic auto industry in America. Until they can turn it around with new products and lower production cost.
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post #24 of 149
8/13/12 at 6:27am
Its not just TV's look around its happened in all forms of products and it boils down to the world economy it stinks ,higher than projected unemployment and lower pay for the jobs that are available
which is a simple term people don't buy what they can't realistically afford when they are struggling to hang on to what they currently have as the evening news shows even more of this to come.
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post #25 of 149
8/15/12 at 8:59am
Quote:
Originally Posted by Tazishere View Post

Asian capitalism doesn't seem to respect intellectual property. One asian company reaps profit by stealing some other asian company's research. Then they have the profit to inovate, and then they become victems of another asian company copying them. It never ends. This started with the Japanese copying American products. Until this is fixed, it will always be a boom-bust cycle. We consumers aid and abet this by buying stolen intelectual property. It never ends.

Truer words never spoken. I simply wonder how long this cycle can continue...it's already been in a place a good, long, while as far as the raw economic side of it is concerned. How much longer until the "severely burned" entities outnumber the others and we see change?

For as hard as that may be for some to believe, I for one think it's inevitable.

James
Edited by mastermaybe - 8/15/12 at 9:05am
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post #26 of 149
8/15/12 at 2:49pm
Quote:
Originally Posted by mastermaybe View Post

Truer words never spoken. I simply wonder how long this cycle can continue...it's already been in a place a good, long, while as far as the raw economic side of it is concerned. How much longer until the "severely burned" entities outnumber the others and we see change?
For as hard as that may be for some to believe, I for one think it's inevitable.
James


i think the cycle will continue as long as newly industrialized asian nations appear and can manufacture the stolen tech at a cheaper price than the mature industrialized asian nations. will be interesting to see how the chinese will respond with their unique form of government owned capitalism when the vietnamese, thai, or burmese companies start undercutting them on the prices for electronic commodities.
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post #27 of 149
8/15/12 at 10:41pm
What was unfathomable just 2 years ago is coming to pass:

"Headlines on Commercial Times detailing how Hon Hai will start selling 60-inch Sharp (paneled) TVs for US$999 at the end of the year. This will ignite a price war and force other TV brand names to reduce prices on their 32-inch and 40-inch TVs currently in inventory. The move was made to increase Sharp's 10G panel plants capacity utilization ratio to 80% by year-end."
"News reports AUO(2409TT) chairman KY Lee is not happy with HonHai Chairman Terry's plan to sell 60" LCD TVs at dirt cheap price, latest news at $999, causing Japanese brands unable to survive and subsequently dragging down other TWnese suppliers. Lee added that Taiwan panel makers will bear the brunt of a high inventory level in panels such as 32" & 40" would then have no choice but to cut prices."
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post #28 of 149
8/15/12 at 11:10pm
China in effect waging economic warfare on its neighboring island enemy.
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post #29 of 149
8/15/12 at 11:26pm
Thread Starter 
Quote:
Originally Posted by specuvestor View Post

What was unfathomable just 2 years ago is coming to pass:
"Headlines on Commercial Times detailing how Hon Hai will start selling 60-inch Sharp (paneled) TVs for US$999 at the end of the year. This will ignite a price war and force other TV brand names to reduce prices on their 32-inch and 40-inch TVs currently in inventory. The move was made to increase Sharp's 10G panel plants capacity utilization ratio to 80% by year-end."
"News reports AUO(2409TT) chairman KY Lee is not happy with HonHai Chairman Terry's plan to sell 60" LCD TVs at dirt cheap price, latest news at $999, causing Japanese brands unable to survive and subsequently dragging down other TWnese suppliers. Lee added that Taiwan panel makers will bear the brunt of a high inventory level in panels such as 32" & 40" would then have no choice but to cut prices."

This has been happening in the U.S. since a year ago, Spec. Maybe they mean in other regions besides the U.S. itself? Maybe they mean there'll be more aggressive marketing? But these products were in Best Buy last year and even cheaper units were in warehouse stores like Costco.

On the plus side, I could use a $299 40" TV. smile.gif
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post #30 of 149
8/16/12 at 3:12am
Thanks much. I am assuming it would actually be quattron panels from 10G.
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