Mobile handset firms struggle in Japan market

Tokyo, Oct 31: The mobile handset business, once promising and profitable, has become a money burner for many Japanese electronics manufacturers in the past six months and analysts say the outlook is murky due to the high-tech slump.

The only bright spot is NEC Corp, which finished the first half with flying colours partly due to its limited overseas exposure and brisk sales of its trend-setting folding phones. The majority of Japanese handset-makers booked restructuring charges to revamp their overseas operations amid rapidly contracting global demand and slowing sales in the maturing domestic market. With the mobile market near saturation, handset-makers have come under pressure to roll out more attractive phones to get consumers to replace their old ones. "Basically, the market is stagnant," said Richard Chu, an analyst at ING Baring. "It’s not about technology any more so much. It’s more about taste, colour, looks and performance."

Matsushita Communication Industrial Inc said it may close its British manufacturing plant and earmarked a special loss of about 12 billion yen for the year to next March. Matsushita Communication, 56.33 per cent owned by Matsushita Electric Industrial Co Ltd, expects to post its first-ever full-year net loss since its listing in 1968.

Mitsubishi Electric Corp also logged 72 billion yen in charges in the first half to cover closing its US mobile operations and restructuring costs at a plant in Europe. A series of recall problems put additional pressure on handset makers such as Matsushita Communication and Sony Corp which launched a joint venture with Swedish Ericsson this month. Sony said the recalls of handsets in the spring cost the company more than 45 billion yen.

NEC, on the other hand, survived the recall incidents and said that consolidated sales at its mobile division grew 61.8 per cent year-on-year to 335.5 billion yen in the first half.

— Reuters