Posts Tagged ‘Lenovo’

A Tale Of Two Companies, Revisited

It’s annual meeting time in Japan, and the final reports for fiscal year 2014 are trickling in. (In Japan, the fiscal year starts on April 1 and runs through March 31.)

Given all of the financial misery that Japan Inc. has been enduring for the past four years, you’d probably cringe before opening the latest consolidated financial statements. Yet, there was a surprise this time.

Let’s look at two of the dominant CE brands in Japan – Panasonic and Sony. The former company grabbed some headlines last year when it announced an exit from the plasma display panel (PDP) business, effective 12/31/13. For years, plasma displays and televisions were synonymous with Panasonic – they dominated the market and provided most of the technological breakthroughs that led to the (still to this day, IMHO) “best in class” televisions on the market.

Sometimes “best’ doesn’t always win. Plasma TV shipments and sales had been in steady decline for the past seven years as more and more consumers chose LCD TVs, particularly after 1080p resolution became widespread and national discounters like Vizio forced prices down to bargain-basement levels.

2013’s final numbers from NPD DisplaySearch show that plasma TV shipments from all brands (Panasonic, Samsung, and LG) accounted for slightly more than 4% of the global TV market. You don’t need a weatherman to know which way the wind blows, and Panasonic – who had been in the midst of a massive review of all 80+ of its business units – did the right thing and quickly cut its losses, however painful that may have been.

Now, it appears all of that aggressive restructuring and cost-cutting has paid off. For FY 2014, Panasonic posted a net profit of about ¥120.4 billion, or $1.18B USD. That represents a spectacular turnaround from a ¥754 billion loss in FY 2013, or about $7B USD.

In addition to the money-losing plasma operations, Panasonic also jettisoned its mobile phone business. (Didn’t know they made mobile phones? Neither did most people.) Along with slimming down underperforming business units, finishing the acquisition of Sanyo and all costs associated with it, and shifting their focus to everything from energy storage solutions to Lumix cameras, the company realized an operating profit of ¥305 billion ($2.3B) for the fiscal year.

Now, on to Sony, who has struggled to maintain profitability for several years, thanks in part to the never-ending red ink generated by its television business unit. Sony won’t post its final numbers until May 15, but an advisory went out on May 1 saying that they won’t be pretty – and in fact will be worse than previous guidance suggested.

The company now is forecasting an operating income of ¥26 billion ($255M USD) for FY 2014 when all is said and done. That number represents a steep drop of 67% from the company’s original forecast of ¥80 billion ($783M USD). Sony identified two primary reasons for the drop in income. I’ll quote from the company’s press release:

“Sony expects to record approximately 30 billion yen in additional expenses in the fiscal year ended March 31, 2014 related to exiting the PC business. Since Sony’s announcement on February 6, 2014 that it will exit the PC business, PC sales for the fiscal year ended March 31, 2014 and expected PC sales for the fiscal year ending March 31, 2015 are underperforming the February expectation. Consequently, Sony expects to record write-downs for excess components in inventory and accrual of expenses to compensate suppliers for unused components ordered for Sony’s spring PC lineup. In addition, certain restructuring charges are expected to be recorded ahead of schedule.”

Okay, so the computer operations weren’t pulling their weight, which is why Sony decided to exit stage right and reportedly sell their VAIO operations to Lenovo (as announced in February). But there’s more:

Sony expects to record approximately 25 billion yen in impairment charges mainly related to its overseas disc manufacturing business. Primarily due to demand for physical media contracting faster than anticipated, mainly in the European region, the future profitability of the disc manufacturing business has been revised. Consequently, Sony has determined that it does not expect to generate sufficient cash flow in the future to recover the carrying amount of long-lived assets, resulting in an expected impairment charge. Primarily due to the reason mentioned above, the fair value of the entire disc manufacturing business also has decreased, resulting in an expected impairment of goodwill.”

Translation: The Blu-ray and DVD business is in the tank, particularly in Europe. Clearly, consumers are turning more and more to cloud storage and streaming of movies and TV shows, and not purchasing or renting optical discs. That’s definitely not good news in Tokyo, but it’s not like this trend snuck up and blindsided the company: I’ve been writing about it for several years now in Display Daily.

Given how aggressively Sony worked a few years ago to convince Warner Home Media and other studios to dump the nascent HD-DVD format in favor of Sony’s home-grown Blu-ray platform, this development must sting all the more. And talk about bad timing: The latest numbers from the Digital Entertainment Group (DEG) show that digital movie sales (streaming and downloads) during the first three months of 2014 totaled $330.25 million, while optical disc sales and revenue were down 13.7% to $1.82 billion from $2.1 billion in the first quarter of 2013, continuing a long-term steady decline that goes all the way back almost a decade.

We won’t have the final numbers from Sony for a few weeks. (Sharp and Toshiba also have yet to report their year-end results.) But you can clearly see what happens when one company faces reality and takes the bull by the horns, while another keeps stalling for time. I’ll check in again in two weeks with the rest of the numbers from Japan, Inc.

The Front Line: Four From Pepcom

Last Thursday (11/15), the Hammerstein Ballroom on 34th Street in New York City was full of tango dancers, Argentine wine, good food – and some interesting products that will get plenty of exposure at January’s International CES.

Pepcom puts on this show several times a year, rotating between the midtown location and the Metropolitan Ballroom on 18th Street.  It’s a chance to get a much more “up close and personal” look at many cutting-edge CE products that would be tough to seek out at larger trade shows.

The November event featured a slew of interesting products from the latest Roomba robotic vacuum cleaners to high-efficiency LED lighting panels and super-dense flash memory sticks and drives. But there were four products in particular that caught my attention.

Lenovo’s IdeaTab Lynx is a clever, hybrid tablet/notebook concept.

Lenovo had a demonstration of its first tablet computer; complete with a snap-on full-size keyboard (the attachment is magnetic). It’s called the IdeaTab Lynx, and is a pretty cool product. The keyboard, which is actually a dock, weighs about 1.5 pounds, and the 11.6-inch screen/tablet comes in just below that. The tablet/screen has a resolution of 1366×768 pixels and employs a 5-point capacitive multi-touch system.

Other features include a 2 MP front camera, 2 GB of DRAM, 32 GB or 64 GB of eMMC storage, and stereo speakers. The IdeaTab Lynx runs Windows 8 from an Intel ATOM dual-core 1.8 GHz processor and battery life is estimated at eight hours for the tablet and another eight hours from the dock. Lenovo has a suggested starting price of $599 for the tablet and another $150 for the keyboard/dock.

Across the aisle, Vizio had its new 70-inch LCD TV set up for inspection. The E701i-A3 Razor LED has all of the usual bells and whistles you’d expect in this size class, including built-in WiFi, a “smart” remote with full QWERTY keyboard, and an extremely slim bezel. Vizio claims the viewable area on this TV is 69.51 inches, and it uses 10-bit signal processing.

Of course, the E701i-A3 comes with Vizio Apps, including access to Netflix, YouTube, Hulu Plus, and Vudu (which together constitute about 85% of all Internet video traffic). Taking a look at the panel, I noticed a resemblance in off-axis performance to Sharp’s 70-inch Aquos and I wouldn’t be surprised if Vizio is sourcing the panel from Sharp. The target MSRP is $1,999, which is where Sharp’s 70-inch Aquos was selling in late January of 2012.

Is this really a Sharp Aquos in Vizio clothing? Could be…

 

The B&N Nook HD+ adds to an already overcrowded market for tablets, but is competitively priced.

 

Next to Vizio, I found the folks from Barnes & Noble showing off their latest Nook tablets – the 7-inch Nook HD and the 9-inch Nook HD+. B&N has come a long way in two years from the original Nook reader, and the product migration appears to be towards do-it-all tablets instead of basic readers. (Nook’s Color tablet reader is still in the line, but apparently will be phased out.)

The Nook HD uses a 1440×900 pixel LCD display and is available with 8 GB ($199) or 16 GB ($229) internal flash memory. It runs a Dual-Core 1.3 GHz OMAP4470 processor and the Android OS. I noticed there is support for Google Office, meaning that Microsoft Office documents can be opened and worked on with this tablet. Battery life is rated at 10.5 hours for reading and 9 hours for video.

The Nook HD+ moves up to a 9-inch screen with 1920×1280 (WUXGA) resolution and comes with 16 Gb ($269) or 32 GB ($299) of internal memory. It employs the same processor and OS as the 7-inch tablet and has similar battery life. I found both tablets very bright and contrasty under the overhead spotlights used in the ballroom, and reflection from the LCD screen was minimal. Alas; there’s still no place to make an external display connection like there is on the iPads.

Mohu has decided it’s spending too much time indoors! This Sky HDTV antenna is the result.

Finally, I ventured to the back of the room by the wine bar and ran into the folks from Mohu. Regular readers will recall my frequent tests of indoor TV antennas earlier this year; a competition that Mohu generally won or tied for first place. The news this year is a re-design of the Leaf Plus into the Leaf Ultimate, with the preamplifier now encased in a separate module. You can also buy this preamp by itself as the Jolt Amplifier.

That re-design allowed Mohu to simplify its manufacturing process – just add the Jolt module to an existing Mohu Leaf and you have an Ultimate model. But Mohu isn’t done there: They’ve also unveiled a new outdoor TV antenna that closely resembles a crossed dipole, used by many antenna manufacturers. The Sky HDTV is designed for mast-mounting on a roof or in an attic, and will also work with the Jolt amplifier. No prices have been announced yet.