Shares in Panasonic dived nearly 20 percent Thursday after the Japanese firm warned of a mammoth $9.6 billion annual loss in the latest sign of trouble for the nation's hard-hit electronics giants.
The consumer electronics firm's shares closed 19.45 percent lower at 414 yen on the Tokyo Stock Exchange after it said late Wednesday that it would report the huge loss as it undergoes a major overhaul of its troubled business.
The dramatic plunge came as rival Sharp Corp. said it would book a record $5.6 billion yearly loss, nearly double its official forecast, and temporarily shelved dividend payments to shareholders for the first time in decades.
While Panasonic said it would achieve an operating profit, restructuring costs and writedowns would result in the 765 billion yen shortfall, close to its record 772.2 billion yen shortfall last fiscal year, one of the worst-ever for a Japanese firm.
The projection was a reversal of Panasonic's earlier vow to return to the black by March next year.
"The focus is on whether this is the end of restructuring-related losses," Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management, told Dow Jones Newswires. "I think that is unlikely."
Moody's warned that it had put Panasonic's credit rating on review for a possible downgrade after cutting its rating by two notches in September.
"The rating action reflects Moody's increasing concern that sluggish demand and intense competition will continue to pressure Panasonic's earnings and leverage," it said in a statement Thursday.
Panasonic, like rivals Sony and Sharp, has suffered in its television business amid falling prices and stiff overseas competition, while a strong yen has also hit Japanese manufacturers.
The television business has razor-thin profit margins and Japanese firms have been unable to keep pace with competition from the likes of Apple and South Korea's Samsung Electronics, which have set the pace in the lucrative global smartphone market.
Samsung, by contrast, posted a record third-quarter profit of nearly $6.0 billion, powered by strong sales of its Galaxy smartphones and display panels.
Panasonic has announced a major restructuring of its liquid crystal display manufacturing division, and is reportedly considering shifting all of its mobile phone handset production overseas because of high costs at home.
The global economic slowdown and last year's quake-tsunami disaster have added to the woes of companies facing a progressively worsening situation in recent years.
Weak demand in Europe, a key market for everything from Japanese televisions and mobile phones to vehicles and electronics parts, has also dented balance sheets.