Quoth the new CEO: "We will no longer conduct operations that don't produce profits."
How bad has Japanese business gotten if any company's CEO needs to make a statement like Sanyo's -- particularly when that statement comes as a revelation? All the same, investors initially rejoiced at Sanyo's announcement that it will slash payrolls by 15%, begin paying down its debt, and close money-losing operations to focus on its profitable businesses. In the U.S., the company's ADRs rose nearly 3% in the announcement's wake. They've since stabilized to pre-announcement levels; traders have decided to wait for signs of progress before banking on a turnaround.
While Sanyo's announcement didn't specify which businesses it might close, cuts may prove most effective in the unprofitable consumer electronics and semiconductor divisions. The company did clearly state its intent to redouble its efforts in manufacturing compressors and various forms of batteries.
To this Fool, that looks like the right call to make. While I don't know a whole lot about Sanyo's compressor business, I have tagged the company as one of two that license NiMH technology from U.S.-based Energy Conversion Devices
It's high time Sanyo started obeying simple logic. The company's shares have fallen 50% since their high in January 2004, and institutional investors have begun to jump ship. According to SEC filings reporting changes in ownership, both Comerica
Those banks apparently made the right call at the time. Sanyo's stock has slid 25% since the banks cut bait and ran. However, if the company can pull off its turnaround -- or simply slow down the rate at which it blazes through cash -- it might be a good time to reverse those trades.
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Fool contributor Rich Smith owns no shares of any company mentioned in this article.