Are JVC's Days Numbered?

by John Neely
Published on Jun 6, 2006 8:00 AM

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June 6, 2006 - Matsushita Electric Industrial Co., one of the world’s leading manufacturers of consumer camcorders has had a banner year in terms of profit growth, largely on the strength of its plasma TV sales. But while the company as a whole is booming, subsidiary JVC has been losing money. As a result, Matsushita may be weighing the value of the JVC brand’s existence when its other consumer electronics brand name, Panasonic, continues to perform well.

According to Reuters, Matsushita investors want to see the company’s strong earnings continue, and shedding under-performing assets are among the options on the table. The arrival of Fumio Ohtsubo as Matsushita’s new president this month contributes to the likelihood that the company may pursue bold moves aimed at boosting profits in coming months.

While outgoing Matsushita head Kunio Nakamura has been a consistent supporter of JVC, Ohtsubo noted in early 2006 that the JVC unit was often a competitor and a partner. In the consumer camcorder market, for example, both Panasonic and JVC have models in direct competition in the entry-level MiniDV and prosumer markets. The upper-end consumer market is divided; Panasonic has traditionally delivered the MiniDV camcorders like the PV-GS400 and PV-GS500 (Review, Specs, $1040), while JVC pushed hard for their Everio hard disk drive camcorders. The benefits of this competitive/complimentary arrangement are now being weighed in the context of JVC’s overall performance.

JVC represents 8 percent of Matsushita’s group sales, and reported an operating loss of 6.9 billion yen (US$61.4 million) in the year ended March 31. According to Reuters, that loss more than wiped out profit growth in Matsushita’s home appliance business as a whole.

If Matsushita did sell off its controlling stake in JVC, the ramifications for the consumer camcorder market are unclear. While JVC’s Everio series has come under scrutiny for their lackluster performance and high cost, their lower-end MiniDV camcorders are strong competitors.