Sharp forecast on Thursday a 450 billion yen ($5.6 billion) full-year loss and warned that it had “material doubts” about its ability to survive. On the same day, Panasonic’s shares lost a fifth of their value in Tokyo after the company forecast a 765 billion yen ($9.6 billion) annual net loss from write-downs in its solar-power, battery and mobile handset businesses.
And Sony, perhaps the best positioned of the companies, posted a net loss of 15.5 billion yen ($194 million) for the quarter on Thursday and warned of falling sales in almost every product it sells.
The three companies face similar problems at the core. They all make good quality, even cutting-edge products — but so do their overseas competitors, usually at lower prices. None of the three have managed to generate the brand pizazz of Apple, or the marketing muscle of Samsung Electronics. In addition, a stubbornly strong yen continues to sap their competitiveness, while Japan’s territorial dispute with China has hurt sales there.
The scale of the losses is the result of specific missteps. A manufacturing bubble in Japan in the mid-2000s masked continued weaknesses in their business models and spurred the companies to take big bets that backfired.
When the global financial crisis brought that boom to an end in 2008, the three were saddled with excess capacity, bloated work forces and investments that they could hardly hope to recoup. And their refusal to make a big enough departure from the ways of their glory years is now making a comeback difficult.
Sharp’s announcement had a quick impact on its credit rating. Reuters reported that Fitch Ratings downgraded Sharp’s debt to junk status on Friday.