Panasonic may cut mobile unit

Sources say Panasonic Corp is considering shrinking its mobile unit.

Cellphone. Picture: Stock.xchng.

TOKYO - Panasonic Corp may shrink its mobile phone unit by withdrawing from Europe within six months, prompting a possible write-down on the business in the year ending next March 31, two sources told Reuters.

Panasonic's new boss, Kazuhiro Tsuga, has pledged to revive the company by cutting money-losing or barely profitable businesses. He has said he will announce a restructuring plan by the end of March.

The company has as much as 70 billion yen ($873 million) of goodwill on its mobile phone business, according to analysts' estimates, after the 2010 purchase of shares in Panasonic Electric Works it did not already own. Writing off part or all of that would add to 41 billion yen of restructuring costs already planned for this business year.

The Japanese company, which stopped sales of mobile phones overseas in 2005, returned to Europe in April with a plan to sell 1.5 million smartphones this business year. Panasonic said in December it wanted to increase global mobile phone sales to 15 million by March 2016 including nine million overseas.

That target is unlikely to be reached, the sources said on condition they were not identified.

Panasonic, which is forecasting an annual operating profit of 260 billion yen, will release results for the quarter ended on 30 September on Wednesday.