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from Breakingviews:

Weak yen makes Japanese electronics firms giddy

By Peter Thal Larsen

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

Japan's assault on the yen has produced some clear winners: investors in the country's beaten-up consumer electronics industry. Shares in Panasonic jumped 17 percent on Feb. 4 after the group reported a less-severe-than-expected quarterly loss. The hope is that stronger exports and recent cost-cutting will transform earnings. But with revenue still shrinking, the recent rally is largely based on hope.

Panasonic's cost-cutting measures are clearly beginning to have an effect. Though revenue fell 8 percent year-on-year in the three months to December, the company reported an operating profit of 34.6 billion yen ($370 million), compared with an operating loss in the same period a year earlier. Sharp, an even more troubled rival, also managed to eke out a small operating profit.

Investors may hope that the weaker yen may boost demand from overseas while making Japanese products at home more attractive relative to pricier imports. Any improvement in sales would have an immediate effect on the bottom line: high costs and an inflexible workforce means that Japanese companies have the highest operating leverage in the world, according to Deutsche Bank. That helps explain why Thomson Reuters' Japanese electronics index is up almost 70 percent since mid-November.

from Breakingviews:

Japan risks consumer electronics death spiral

By Peter Thal Larsen

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

“We are among the losers in consumer electronics.” That frank assessment by Panasonic president Kazuhiro Tsuga sums up the state of Japan’s once world-beating electronics industry. The economy is partly to blame for slumping demand for Japanese gadgets, but so are rivals like Apple and Samsung. The worry is that the financial squeeze undermines product development, leaving Japan ever further behind.

from Breakingviews:

Beware “blame China” earnings phenomenon

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By John Foley

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Get ready for some corporate China-bashing this earnings season. Investors are already punishing companies like Burberry and Cummins for what they perceive to be disappointing growth from the Middle Kingdom. A slowdown in the world’s growth engine will see many more CEO fingers pointing east.
 
Trench-coat maker Burberry’s shares fell 7.4 percent on June 11 after it said annual Chinese same-store growth was somewhere near 15 percent in the past quarter, compared with twice that a year earlier. Never mind that this time last year Burberry had just bought out and glammed up its Chinese stores, making 2011 a tough act to follow. Investors saw a hole in the China story and ran through it.

from Breakingviews:

Corporate earnings hopes are still too high

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By Robert Cole

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Equity analysts are sharpening their red pencils. As euro zone worries clog the wheels of global commerce, forecasts for corporate earnings are falling. Yet global investors may still be expecting too much from companies, at least in the near term.

from Breakingviews:

China’s Tencent slows as new Internet models bloom

By Wei Gu
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Bigger is generally deemed better in China’s billion-strong consumer market. Tencent, the nation’s second-biggest Web firm by market value, has been jumping into every new hot Internet sector. But the strategy is backfiring. The firm’s year-on-year profit growth slowed to a four-year low of 14 percent during the third quarter. Tencent needs to think beyond scale for the sake of it.

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