Japanese electronics manufacturer Panasonic Corp announced it would be withdrawing from the Japanese smartphone market. The decision would include the reduction of smartphone operations by outsourcing production to emerging markets such as India.
The said decision was confirmed by its President last Wednesday. The announcement comes after the company reported losses amounting to USD15 billion in the last two financial years. With the decision, it is hedging that it would recover through its transformation from a computet gadget manufacturer into a supplier for other businesses.
This transformation is spearheaded by Panasonic's President Kazuhiro Tsuga and warned that he would be weeding out any division in the company that fails to meet a 5% operating margin goal by the next three years.
Tsuga, through an interview with Reuters, said that the mobile phone division of Panasonic was expected to lose more than the JPY1.1 billion targeted loss it had earmarked by March 2014. The mobile division posted a JPY8.1 billion loss last year.
Tsuga said, "It's not acceptable for the company to be bleeding red ink like this, so we have to think about ways to develop assets that we do have in a more effective direction."
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