Sachi Izumi and Rhee So-eui, January 12, 2009
ciol.com

TOKYO/SEOUL, JAPAN: Japanese electronics maker Panasonic Corp said it aims to boost sales of flatscreen TVs by 50 per cent, joining rival LG Electronics Inc in setting bold growth targets in a slowing market.
The world's largest plasma TV maker said on Friday it aims to sell 15.5 million plasma and liquid crystal display (LCD) TVs in the year starting in April, up from estimated 2008/09 sales of 10.3 million as it increases product line-ups and expands sales channels.

The target, set in tandem with plans to cut investments on two new flat-screen TV plants by about $1.5 billion by 2012, would put Panasonic well ahead of estimated market growth if achieved.

It echoed ambitious projections earlier on Friday from LG, which said it aims to raise its LCD TV sales, where it ranks third in the world, by 50 per cent to 18 million sets this year and its plasma TV sales by 7 to 25 percent to between 3 and 3.5 million.

One Korean analyst said LG's targets, viewed as part of a strategy to steal a march on Japanese rivals being hurt by the strong yen, were unrealistic.

Samsung, which ranks No. 1 in LCD TVs and second in plasma TVs, gave a more subdued forecast off at least 26 million flat-screen TVs sold in 2009, Yonhap News reported on Thursday. That would be a growth of 10 per cent for LCD TVs and 33 percent for plasma from last year.

Research firm DisplaySearch has forecast the LCD TV market to grow 17 per cent in 2009 in unit terms, slowing from a 29 percent increase in 2008, while it sees plasma TV growth of just 5 per cent in 2009 compared with a 24 per cent rise in 2008.

Weakening economies around the world have been eating into demand for flat TVs, digital cameras and other electronics products, with Hitachi Ltd -- Japan's top electronics maker -- expecting to miss its LCD TV sales target by as much as 10 per cent in 2008/09.

Japan's Tokyo Electron Ltd said on Friday orders for its tools to make flat panel displays and solar panels sank 98 per cent to 500 million yen in October through December.

Total orders at the company, which is also the world's No.2 supplier of machines used to make semiconductors, fell 65 per cent to 37.5 billion yen.

'Cut-throat competition'

Panasonic shares closed down 1.3 per cent and LG shares fell 3.0 per cent.

Panasonic, which changed its name from Matsushita Electric last year, had cut its net profit forecast by 90 per cent in November, when it said it would need to restructure to weather a downturn that has already forced Sony Corp and other rivals to shutter plants and cut jobs.

The company warned on Friday it would be hard to reach all of its targets under its mid-term plan, and said it was cutting investment on flat TV plants under construction in Hyogo prefecture, near Osaka, by 23 per cent.

"We will aim for a bigger growth than the (flatscreen) industry as we cope with a slowdown in the market," Panasonic president Fumio Ohtsubo told a briefing.

"We hope to win the cut-throat competition ... We will not consider the planned cut in investment as a negative move."

Along with slowing demand, margins on TVs are also under pressure, with prices plummeting as makers and retailers try to clear piling inventories.

"Panasonic is trying to step on both the accelerator and the brake at the same time," said Mizuho Securities analyst Ryosuke Katsura. "It is pushing hard to gain market share at the same time that it trims down, most likely by consolidating its factories around the world.

"The strategy it is mapping is one aimed at springing back to growth when the economy does recover. But that's not going to be visible any time soon."

Katsura warned that Panasonic could plunge into a net loss next business year, against a 30 billion yen profit that the company expects in 2008/09.

Analysts were also sceptical of LG's targets.

"LG's target is unrealistic under current market conditions. U.S. consumers are buying digital signal converters (for their analogue televisions) instead of new TVs, even with huge discounts," Park Sang-hyun, an analyst at HI Investment & Securities.