Sanyo Back in the Black

Years ago, Sanyo was one of the premium names in consumer electronics. Its car stereos, for instance, were known for their terrific sound qualities, as well as their reliability. Lately, however, all the company has done is lose money.

In late December, Japanese regulators accused the company of faking earnings reports, and Sanyo ended up amending its financial statements going all the way back to 2000 to show larger losses than it had previously reported. Ultimately, in fact, Sanyo would book nearly $40 million more in losses than it had already reported for the period April 2000 to Sept. 2007. Sanyo officials denied any intentional subterfuge, claiming the error was due to weak internal controls and a poor corporate understanding of relevant accounting rules.

That was a hard sell, especially since it had only been a few months before – also in 2007 – when Sanyo admitted that it had falsified its fiscal 2003 earnings by reporting a profit instead of the loss it actually incurred.

Needless to say, these financial misadventures left Sanyo in a much-weakened state. For that reason, Sanyo ended up raising capital to bulk up its balance sheet before 2007 came to a close. U.S. investment-banking giant Goldman Sachs Group Inc. (GS) headlined a group of investors that ponied up $2.8 billion in cash so that Sanyo could stay solvent, BetaNews.com reported.

Even that wasn’t enough, though, and Sanyo ultimately was forced to sell some assets. It first divested its wireless-telephone retail unit, and followed that up by selling its stake in Sanyo Electric Credit Co.

Finally, in January, Sanyo announced plans to sell its mobile phone business to Japan’s Kyocera Corp. (ADR: KYO) for roughly $375 million.

On Thursday, Sanyo announced that it had returned to profitability for the first time in four years, aided greatly by strong sales of its rechargeable batteries and digital cameras. The company also said that its profit would escalate substantially this year, essentially because of the sale of its cellular phone business unit.

Long-term, analysts believe its foray into solar technology and rechargeable batteries – both still-nascent growth businesses with a lot of promise – will prove profitable. It’s investing heavily in both those ventures.

But its traditional home-electronics business – which includes such product lines as cooking appliances and refrigerators – remains mired in the red. A linkup with Sharp could well provide some answers – or at least some respite from the river of red ink flowing from those ventures.

Source: New Ventures Have Sanyo Looking Sharp

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