Japanese consumer electronics giant Panasonic Corp will slash 40,000 jobs over the next two years in a bid to pare costs and keep up with ever-harsher competition from Asian rivals, a source said on Thursday.
The company, which employs about 380,000 people, will incur more than 100 billion yen ($1.22 billion) in expenses this year related to the job cuts and a reorganization of production facilities, the Nikkei newspaper reported earlier.
The figure is huge, but so is the company, and for an old-fashioned one like Panasonic, this is a big move, said Toru Hashizume, chief investment officer at Stats Investment Management in Tokyo.
In the mid-term, the stock is priced low, it is around the level it was after Lehman, even though the current conditions are more favorable for Panasonic, he added, referring to the collapse of Lehman Brothers in the global financial crisis.
Once unrivalled, Japan's consumer electronic firms are facing increasing competition from Korean and Chinese producers in particular.
The source who spoke to Reuters had direct knowledge of the matter but cannot be identified because the plan has not been made public.
Panasonic announces its earnings for the year ended on March 31 at 0600 GMT. President Fumio Ohtsubo will speak to the media about the company's future direction from 0810 GMT.
Panasonic is seeking to shift its focus to environmental and energy-related businesses such as rechargeable batteries in order to duck competition from Samsung Electronics, LG Electronics and others in consumer technology.
As part of that strategy, it announced last year it would make Panasonic Electric Works and Sanyo Electric Co wholly owned units, absorbing a combined 160,000 workers, the Nikkei reported.
Panasonic is now seeking to shed staff in overlapping businesses, particularly abroad, it added.
The units make a wide range of products including rechargeable batteries, factory robots, electronic components, lighting and solar panels.
Panasonic spokesman Toshihiko Shibuya said the job losses had not been announced by his company and declined to elaborate.
Shares of the electronics conglomerate rose 2 percent in Tokyo in morning trade on Thursday, outpacing a 1.4 percent gain in the benchmark Nikkei 225 index.
Unlike their western counterparts, Japanese companies tend to avoid dumping large numbers of workers, particularly at home.
The latest staff cuts overshadow past Panasonic restructurings including 26,000 workers shed after the information technology bubble burst, and about 15,000 in the aftermath of the Lehman shock, the paper said.
It is equal to about all the jobs lost in the United States in March according to data released by Challenger, Gray & Christmas, Inc, an outplacement firm that compiles monthly U.S. employment numbers.
Panasonic may have logged a net profit of about 70 billion yen for the year ended March 31, missing its own forecast of 85 billion yen due to lower sales since the March 11 earthquake, the paper added.
For the financial year to March 2012, net profit will likely fall 30 percent to around 50 billion yen, excluding the effects of the quake, it reported. ($1 = 82.220 Japanese Yen)
(Additional reporting by Arpita Mukherjee in Bangalore and Isabel Reynolds, Nathan Layne, James Topham and Tim Kelly in Tokyo; Editing by Joseph Radford and Lincoln Feast)