Panasonic Boosts Battery Unit Outlook, Unveils Profitability Reform Plan

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Panasonic Holdings has raised its full-year earnings forecast for its energy division, which supplies batteries to Tesla, citing strong sales of energy storage systems and improved profitability at its U.S. battery plant. The revised outlook increases the segment’s expected earnings by 14% to 124 billion yen ($798.35 million), following a 39% rise in operating profit during the third quarter.

The company also announced a new management reform plan, aiming to boost group profitability by over 300 billion yen ($1.93 billion) and achieve a return on equity above 10% by the fiscal year ending March 2029. It plans to improve profitability by 150 billion yen by fiscal 2026 and another 150 billion yen by fiscal 2028.

Panasonic’s energy unit benefited from higher sales of energy storage systems and lower material costs, offsetting an overall decline in automotive battery sales. Reduced production in Japan and increased costs related to a new U.S. battery plant and a renovated facility in Japan’s Wakayama prefecture impacted operations.

Expanding its North American footprint, Panasonic Energy currently operates a battery plant in Nevada supplying Tesla and is set to open a second U.S. facility in Kansas this year. The segment reported third-quarter operating income of 42 billion yen ($270.46 million).

Despite industry-wide concerns over slowing EV demand, Panasonic has retained its full-year profit forecast of 380 billion yen for the entire group. It continues to compete with major Asian battery makers, including China’s CATL and South Korea’s LG Energy Solution, the latter of which recently announced plans to cut capital expenditure by up to 30% due to weakening EV demand.

 

Alphabet Faces Investor Scrutiny Over AI Spending Amid Slowing Cloud Growth

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Alphabet is set to report earnings on Tuesday, with investors closely watching its substantial AI investments as revenue growth slows due to weaker advertising and cloud performance. The Google parent’s capital expenditure for 2024 is estimated at $50 billion, with further increases expected in 2025 to support cloud expansion and AI-driven search enhancements.

The rise of low-cost AI models, such as those from Chinese startup DeepSeek, has intensified concerns over a potential AI price war. Alphabet, like Microsoft and Meta, is defending its high AI spending, arguing it is necessary to maintain a competitive edge.

Google Cloud, a key growth driver, is anticipated to show a slowdown in the fourth quarter. The segment is expected to report a 32% revenue increase, compared to 35% in the previous quarter. This performance will be scrutinized following Microsoft’s recent results, where Azure’s core cloud services underperformed despite AI-driven gains. Analysts are keen to see whether Google experiences a similar trend.

Alphabet’s Search and Other revenue is projected to have grown 11.2% in Q4, slightly lower than the 12.2% increase in Q3. The company continues to face rising competition from Amazon and TikTok in the digital ad space. However, higher political ad spending linked to the upcoming U.S. Presidential elections may have provided a temporary boost.

Overall, Alphabet’s revenue is estimated to have grown 11.9% year-over-year to $96.6 billion, reflecting a slowdown from the previous quarter. Despite a 7% rise in its stock price this year, concerns about a potential deceleration in its cloud segment have mounted, especially after Microsoft’s disappointing cloud results.

Investors will be closely watching Alphabet’s ability to balance AI investments with profitability, as well as its strategy to maintain leadership in both the search and cloud computing markets.

 

Google Appeals to Overturn App Store Verdict in Legal Battle with Epic

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Alphabet’s Google and Epic Games faced off in a U.S. appeals court on Monday, as Google sought to overturn a jury verdict and a judge’s order requiring it to modify its app store policies.

During the hearing before the 9th U.S. Circuit Court of Appeals in San Francisco, Google’s attorney argued that the trial judge had made legal errors that unfairly benefited Epic Games. The lawsuit, initially filed in 2020, accused Google of monopolizing app distribution and in-app payment systems on Android devices. A jury ruled in favor of Epic in 2023, leading U.S. District Judge James Donato to order Google to implement reforms, including allowing users to download competing app stores via the Play Store.

Google has appealed the decision, which is currently on hold. Jessica Ellsworth, representing Google, contended that the company faces strong competition from Apple’s App Store and that the trial judge had improperly limited Google’s ability to present that argument. However, Judge Danielle Forrest of the 9th Circuit challenged Google’s stance, emphasizing differences between the Android and Apple ecosystems.

Epic’s attorney, Gary Bornstein, urged the court to uphold the previous ruling, arguing that Google’s app store policies had harmed competition for years. He also dismissed Google’s claims that the required changes would compromise user privacy and security.

The case has attracted support for Epic from Microsoft, as well as the U.S. Justice Department and the Federal Trade Commission. A decision from the 9th Circuit is expected later this year, with the possibility of further appeal to the U.S. Supreme Court.