Matsushita Communication In-dustrial Co, pushing to boost sales of phone equipment, said it has discussed allying with companies in Europe and China to develop and sell base stations for faster wireless Web services.
"We might team with two different companies that have strengths in one region or the other," Yasuo Katsura, a senior managing director at Matsushita Communication who'll become company president next month, said in an interview. "We're thinking of the European and Chinese markets separately."
Phone companies are set to spend billions on networks for services giving cellular-phone subscribers the ability to view short video clips, listen to music and access the Internet at faster speeds. While dominant at home, Japan's makers of wireless communication network equipment may have trouble breaking into markets where they're less established, analysts said.
"Allying with European peers is a must," said Yoshiharu Izumi, a senior analyst at UBS Warburg (Japan) Ltd, who rates the shares "hold." "China is also a difficult market for Japanese companies."
The maker of Panasonic brand handsets is looking to Europe to boost profit and regain investor confidence. The company's shares have fallen by about half since Jan. 1, making them the worst performing of all shares on the Nikkei 225 Stock Average.
Matsushita, Japan's No. 1 mobile-phone maker, is not the first Japanese equipment maker to consider partnering to expand abroad. Domestic rivals NEC Corp and Fujitsu Ltd, which both make network equipment to route calls placed from a mobile phone, already have partners in Europe to reinforce their marketing.
Yokohama-based Matsushita Communication must also contend with competition from European rivals such as Ericsson AB and Nokia Oyj, which have adopted the practice of lending money to their customers in return for equipment orders, analysts say.
NEC, the fifth-biggest supplier of mobile-phone network equipment, and Siemens AG, the seventh largest, are already in a development and marketing agreement. Fujitsu has partnered with Alcatel SA, the eighth largest. Ericsson, Nokia, Motorola Inc and Nortel Networks Corp are the four biggest makers of such equipment, according to a Nomura Research Institute report.
"Matsushita is probably in talks with the big players," said Katsuyuki Minami, an analyst at Shinko Securities Co, who rates the shares "neutral plus." Matsushita expects annual net income for the year ending March 31 to fall 22 percent to ?26.5 billion (US$215 million), dragged lower by fewer sales of mobile phones.
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