Panasonic could close businesses, Sony will win back customers one product at a time while Sharp is getting more competitive. The CES show in Las Vegas is all about promises of both the financial and technological kind. Talk is one thing, but five years of combined net losses show delivery is another. After so long, do they even have the strength to live up to their hype?
Start with spending – and not the endless restructuring bills they have racked up. Nothing says confidence quite like funding capital formation. In fact, neither capex nor research funding have entirely collapsed. Capex is about 5 per cent of sales for each – in line with their averages, although with flat or falling sales, that hardly screams big spender. Both Sony and Panasonic's R&D budgets are above, or close to average levels. That bodes well. But Sharp's cash-conserving efforts have shrunk its spend to a fifth of 2008 levels. Its ability to keep up is potentially at risk – assuming it gets through the current crunch.
Technical investment aside, what about their choice of businesses? Toshiba and Hitachi have fared better than their consumer-focused peers because they got rid of some, if not all, weak units. So Panasonic's promise this week that closing units would be a last resort is hardly inspiring. Sony has been the most active, including a stake in Olympus and buying Gaikai, the cloud gaming service. To be fair, its record is not terrible: over five years, Sony has made a net 76-billion yen ($850-million) from asset and investment disposals (Panasonic has made a 155-billion yen loss). Sharp's financial scramble will dictate its choices – and its partners, such as Hon Hai and Qualcomm, are in strong positions to ask for a lot.
Predicting the demise of Sony, Panasonic and Sharp has been as thankless as hoping for a revival. The limbo has left them trading at an average price to earnings before interest, tax, depreciation and amortisation of 3 times – half the level of the Nasdaq Composite and a third below their local equivalent. Investors are clear: time to deliver.