Panasonic will end smartphone sales in Europe, less than a year after its return

The Japanese electronics firm earlier this year launched its first phone outside Japan since 2005

Japan's Panasonic said Wednesday it will end its brief return to the European smartphone market, pulling out less than a year after launching its first handset outside of Japan since 2005.

Panasonic had high hopes for its Eluga smartphone, launched in Europe in April. The thin, waterproof Android phone has a crisp OLED display and a touch-card interface that can interact with Panasonic home appliances -- but those features weren't enough to distinguish it from the growing pack of smartphones. The company now says it will stop selling phones in Europe by March 2013.

"We will still be continuing our phone business in Japan," said spokesman James Bell.

The company also sells several versions of the Eluga smartphone, and other models, in Japan. Bell said he couldn't comment on how the move would affect Panasonic's plans to eventually expand to the U.S. and other markets.

The company announced the move as part of a large restructuring that also includes reorganizing its mobile operations, cutting management salaries, consolidating factories and even suspending the company basketball team. It also revealed Wednesday its earnings for the six-month period through September, saying the business reforms dragged it to a ¥700 billion (US$8.8 billion) loss, five times its loss a year earlier, as revenues slipped 10 percent.

For its fiscal year through March, Panasonic previously predicted a slight profit but now says it will book nearly US$10 billion in losses. Last year, the company had a similar loss, which was among the highest ever for a Japanese manufacturer.

In reorganizing its mobile operations, the company said it will set up a new company entirely devoted to the handset business. Currently that business is combined with its base station business, but the two will be separated into newly formed subsidiaries.

Panasonic sells mobile phones in Japan through the country's three main carriers. The company has promoted its Eluga line's ability to interact with its latest appliances, with features such as using a cloud service to download cooking settings for its rice cookers and checking air conditioner settings while outside the home.

The company will also halve its number of domestic factories producing rechargeable batteries for consumer devices, to three locations from six.

It will also slash salaries for its leadership, including a 40 percent reduction for its president and chairman and a 20 percent cut for other executives.

The Osaka-based company pulled out of foreign phone sales in 2005, after years of tepid sales. It had hoped to use the current smartphone boom to relaunch outside of Japan.

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Tags smartphonesbusiness issuesfinancial resultsconsumer electronicsrestructuringPanasonic

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Jay Alabaster

IDG News Service
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