Shares of Panasonic Holdings Corp. surged 15% following the company’s announcement of plans to revamp its workforce and eliminate underperforming divisions, as it shifts focus towards high-margin sectors such as powering AI data centers. The Osaka-based firm, which has diverse operations ranging from hairdryers to lithium-ion batteries for companies like Tesla Inc., intends to restructure its low-growth businesses and adjust its employment framework, as stated in a release on Tuesday. Following comments from Panasonic’s CEO regarding a review of the company’s long-established TV operations, the stock experienced its largest intraday increase since February 2014. CEO Yuki Kusumi mentioned, “There may be other options besides a sale,” when asked about the potential sale of the TV division, expressing a sense of nostalgia for the company’s television products. Panasonic aims to increase its profits by over ¥150 billion ($966 million) by March 2027, with an additional ¥150 billion targeted by March 2029. This strategy includes consolidating various production, sales, and logistics operations, with discussions ongoing among executives about the extent of the personnel changes. Citi analyst Kota Ezawa described the restructuring as “some drastic surgery,” noting that Panasonic is poised to significantly reduce its workforce and divest multiple businesses while generating profits and cash flow for the first time in its history. Kusumi has been advocating for substantial changes at the company, which was established in 1918. He indicated that Panasonic plans to incorporate artificial intelligence technology throughout its operations and collaborate with Anthropic to enhance AI-related revenue. The company is particularly focused on meeting the increasing demand for high-efficiency and heat-resistant components in data centers. Once a leader in consumer electronics, Panasonic now serves as a major battery supplier to Tesla and is looking to expand its software capabilities while striving to maintain its relevance in appliances and industrial devices. In the December quarter, Panasonic reported a 4% increase in operating profit, driven by its lifestyle segment, which includes household appliances, and its energy segment. The manufacturer of automotive batteries has benefited from the Inflation Reduction Act, which offers tax credits for battery production in the U.S. Panasonic, which operates battery facilities in Nevada and has expansion plans in Kansas, does not anticipate the cancellation of these tax credits under a potential Trump administration.
Panasonic’s stock saw the largest increase in 11 years following its announcement of restructuring initiatives.
