Panasonic Corporation (NASDAQOTH:PCRFY)

CAPS Rating: 2 out of 5

The Company is engaged in the production and sales of electronic and electric products in an array of business areas.


Player Avatar NetscribeInterna (74.75) Submitted: 1/31/2007 6:43:58 AM : Underperform Start Price: $18.34 PCRFY Score: +87.60

Matsushita Electric Industrial Co., founded in 1918 is a global player involved in production and sale of electronic and electric products. It has a huge portfolio of around 86,000 products that mainly operates under the brand name Panasonic. The company operates in six segments with AVC Network division contributes maximum to the overall inflows i.e. around 40%; product profile includes televisions, DVD players, digital cameras, and audio equipments.

The consumer electronics industry is one of the most competitive in the world, with global market size reaching over $135 billion. Industry’s single digit growth rate and ever reducing product cycle is proving very difficult for many companies to survive. Although many major producers are facing a strong rise in units, the constant price-cutting is creating pressure. Adding to it, the increase in raw materials is also creating additional worries for the industry players.

Matsushita is witnessing a modest rise in revenues, the cost cutting and in house production is having positive impact on the margins. The plasma TV is the biggest revenue driver for the company in which it holds a strong market share. However, the stock is recently seeing a slide, with concerns over company’s plan to build a $2.4 billion plasma display factory, which may prove too costly. Adding to it, a strong threat from LCD (Liquid Crystal Display) televisions can make things difficult for the plasma factory in the future. Matsushita’s future outlook also does not look much appealing; mainly due to difficult conditions prevailing in the consumer electronics industry. Further, as more than half of company’s portfolio consists of maturing product line, it will be very tough for company to beat the benchmark returns in such a challenging environment, and thus making it logical to stay away from the stock at current levels.

Member Avatar NetscribeInterna (74.75) Submitted: 5/28/2007 5:27:49 AM
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Matsushita completes yet another fiscal, though this time it was with a much better performance. Revenues for the entire year registered an upswing by meager 2%, aided by higher sales from AVC networks, home appliances, components & devices. The strong sale of plasma TV’s also contributed substantially, which was partially offset by break neck competition and steep price falls, especially observed in flat TV arena. However it is the net income tally that impresses the most growing by 41% its highest level in sixteen years. The bottom-line growth can be attributed to improved margins and revenue growth, which was further boosted by lower early retirement benefit expenses.Matsushita is in final stages of choosing U.S. private equity firm TPG as a preferred bidder for its struggling electronics unit JVC. The deal would be worth approximately $682 million, and considering Matsushita’s 52.4% holding in JVC, it could gain a sizable amount from the deal. This will also benefit Matsushita’s ongoing restructuring activity, under which recent merger of three of its subsidiaries took place. Matsushita the world’s biggest plasma TV maker holds one third of the $20 billion global plasma TV market. However the average street price of plasma TV falling 20% in Japan, and by 25% outside Japan, has raised various concerns, as the company is investing heavily on the plasma TV segment. Moreover, the concerns that plasma TVs could lose further ground to LCD TVs, whose market size has already become more than twice as big as that of plasma TVs, is reflecting on Matsushita’s range bound stock price movement, and might continue to happen until there are clear signs of plasma TV’s future growth. Thus it will be better for an investor to stay away from Matsushita until the future outlook is much clear.

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