At Panasonic, blunt chief looks to force turnaround

Wed Nov 7, 2012 4:01pm EST
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By Tim Kelly

TOKYO (Reuters) - In a presentation beamed to Panasonic Corp offices around the world last week, company president Kazuhiro Tsuga stunned middle managers with the blunt message that their bonuses would be cut by more than a third.

A couple of hours later, he warned investors in Tokyo that Panasonic would lose close to $10 billion in the year to March as it writes down assets and restructures - taking cumulative losses at the 94-year-old firm to nearly $25 billion in five years. Tsuga branded the maker of Viera TVs a "loser" in consumer electronics.

Tsuga's move, and its execution, mark him out as a bold leader who is not averse to taking the tough decisions to turn around Panasonic. With local rivals Sony Corp and Sharp Corp, Panasonic is battling something of a death spiral of crushed demand in an anemic global economy, intense competition, a bloated business portfolio and weakened finances.

Karl Roberts, managing director at AlixPartners, said the mobile gadgets market, a near-duopoly of Samsung Electronics and Apple Inc, is a "winner take all business," but the hope for rivals is that product life cycles can turn over fairly quickly.

"The question for all companies who are not Apple or Samsung is what are their prospects for those distinctive market place developments. What everybody's after is how do we get to that durable success that companies such as Apple have achieved."

Tsuga, 55, who has a liking for muscular cars, preaches survival through tough love.

He warned his managers that businesses failing to earn margins of at least 5 percent would have no place in a re-modeled Panasonic, according to a person at the company who was not authorized to speak about the closed-door broadcast.

BOLD CHOICE   Continued...

Panasonic Corp's new president Kazuhiro Tsuga poses in front of the company's logo before his interview in Tokyo July 9, 2012. REUTERS/Kim Kyung-Hoon