Panasonic Cuts 2009 Earnings Outlook By 90 Percent

November 27, 2008 1:27 p.m. EST

Tokyo, Japan (AHN) - Panasonic Co. cut its fiscal 2009 earnings outlook by roughly 90 percent as sluggish global consumer markets, heavy competition and a rising yen have the company drastically lowering expectations.

The electronics giant expects earnings for its fiscal year ending March 2009 to be 30 billion yen ($316 million), drastically lower than original forecast for 310 billion yen ($3.3 billion).

Panasonic now expects revenue to total 8.5 trillion yen ($89.5 billion), down from the previous forecast of 9.2 trillion yen ($96.8 billion).

The company said business conditions were deteriorating sharply and that the financial crisis originating in the U.S. has spread across the world with business sentiment in Japan and overseas significantly worsening.

Panasonic also said it will likely take write-downs for business restructuring expenses and for losses on investment securities.

The company posted profit of 55.5 billion yen ($596 million) in its second quarter, a 16 percent decline from the previous year. Based on the new 2009 guidance, it is likely Panasonic will post a steeper decline when fiscal third quarter earnings are released in January.

Panasonic is not the first electronic giant to cut forecasts. Sony Corp. recently lowered its earning outlook by nearly 40 percent.

The news comes just weeks after Panasonic announced that talks are ongoing to acquire smaller rival Sanyo. An acquisition of Sanyo would give Panasonic a shot at being the world's largest electronics company.