Toyota, Panasonic CEOs Silence After Quake Tests Investors, Hurts Shares

Two weeks after Japan’s strongest earthquake on record, investors have yet to hear from the leaders of Toyota Motor Corp. (7203) and Panasonic Corp. (6752) about how they’re dealing with the crisis.

Toyota President Akio Toyoda’s public comments have been limited to condolences for victims and their families in a March 14 posting on the company website and another two days later on a racing blog through his alias “Morizo.” Panasonic, Japan’s biggest home-appliance maker, hasn’t disclosed how many factories were idled by the March 11 earthquake and tsunami, and President Fumio Ohtsubo has shunned interview requests. The government estimates the disaster that’s killed more than 10,000 people may also cost as much as $300 billion. Japan’s CEOs are unlikely to turn their attention toward informing investors as fast as Western executives would, said Kuniko Odaka, who teaches corporate strategy at Kwansei Gakuin University in western Japan.

“In Japan, the belief that the president runs the company for employees is very strong, so in cases like these it’s not uncommon for the president to say the investors don’t matter,” said Odaka, who worked for Procter & Gamble Co. during the 1995 Kobe earthquake that killed more than 6,000. “In the West, companies feel a stronger obligation to shareholders and to disclose information.”

Tepco Crisis

The magnitude-9 temblor crippled a Tokyo Electric Power Co. nuclear plant in Fukushima prefecture that has since leaked radiation. Utility President Masataka Shimizu attended a press conference March 13 and hasn’t appeared before reporters since because he’s been at company headquarters dealing with the crisis, Takeo Iwamoto, a spokesman, said by phone yesterday. There aren’t any current plans for Shimizu to hold a press conference, Iwamoto said. As Japan’s chief executives scramble to assess damages, holding back on disclosure may erode confidence for some investors, said Michael Yoshikami, president and chief investment strategist at Walnut Creek, California-based YCMNet Advisors. “No news can be perceived negatively when your investor population is global and when much of your market is outside Japan,” said Yoshikami, whose firm manages about $1 billion. “I can understand culturally what is going on. Toyota may be thinking it’s unseemly to talk about their own issues.” Losses from Japan’s record earthquake and ensuing tsunami may total $200 billion to $300 billion, according to Risk Management Solutions Inc., which advises insurers and is based in Newark, California.

Twitter Updates

Investors outside Japan comprise almost 25 percent of the shareholders in Toyota, the world’s largest automaker, said Shiori Hashimoto, a company spokeswoman. “President Toyoda has been working tirelessly to secure the safety of workers and restoring operations in Japan as soon as possible,” said Keisuke Kirimoto, a spokesman. Toyoda has been in back-to-back meetings and is not at a point where he can go public with any statements, he said. Eighteen factories will remain closed through March 26, and the company said yesterday it would resume production of Prius and Lexus hybrid models at two of those factories on March 28. Toyota’s market capitalization has dropped by 1.3 trillion yen ($16 billion), a decline of 10 percent, since the day before the quake. Panasonic’s market value has fallen by 8.3 percent or 221 billion yen. That’s in line with the 8.6 percent drop in the Nikkei 225 Stock Average over the same period. “We’re prepared to issue our top executive’s comments at the appropriate time,” said Akira Kadota, a Tokyo-based spokesman for Panasonic. Ohtsubo heads the company’s task force set up March 12 to deal with the emergency, he said.

Softbank, Nissan

Not all CEOs have kept quiet. Softbank Corp. (9984) Chairman Masayoshi Son updated his almost 950,000 Twitter followers on what the nation’s third-largest wireless operator was doing to help relief efforts and to fix downed phone lines. “Our engineers are working all night to restore telecommunications,” he wrote in a March 18 posting. “We’re facing difficulties such as the lack of electricity, the tsunami wiping out telecommunications equipment, as well as closed roads and shortage of gasoline.” Son met governors in the disaster areas to offer assistance in relief efforts, stopped charging for some services and visited shelters in disaster areas. “I cannot stop my tears,” he posted March 18. Nissan Motor Co. Chief Executive Officer Carlos Ghosn, who also leads France’s Renault SA (RNO), was in Paris attending an executive committee meeting when the earthquake hit.

Emergency Center

Japan’s second-largest carmaker set up an emergency center “within hours” of the earthquake, Ghosn said this week in an interview. About 100 employees, including top management, are there monitoring factories on an hourly basis. Nissan resumed operations at six plants on March 21. It will take the Yokohama-based carmaker until mid-April to resume major production at its engine plant in Iwaki, Fukushima prefecture, Ghosn said. Nissan’s other Japanese production sites are now operating. “We have a pretty good assessment of the situation of the company,” he said. “We are getting more confident every day.” Ryuji Yamada, president of NTT DoCoMo Inc. (9437), Japan’s largest mobile-phone operator, hopped on a helicopter to Miyagi prefecture March 12 to witness the damage ravaged by the tsunami in the northeastern region of the country. Yamada ordered the deployment of 30 mobile base stations and 30 power-generating cars, the installation of 400 power generators and the distribution of 910 mobile and 630 satellite phones to local governments and shelters, according to Naoko Minobe, a company spokeswoman.

Honda Drive

Takanobu Ito, president of Tokyo-based Honda Motor Co., the country’s third-largest carmaker, drove more than four hours north to Tochigi prefecture the day after the earthquake, spokeswoman Natsuno Asanuma said. The temblor killed one worker and injured about 30 at three facilities there. “We want everyone in various fields to do the best to revive,” Ito told employees in a March 14 message. Honda’s research-and-development center in Tochigi won’t be fully operational for several months, the company said yesterday.

Some CEOs dealt with the crisis remotely.

It was the middle of the night when Sony Corp. (6758) Chairman Howard Stringer, in New York to have back surgery, received word of the disaster that knocked out eight of the company’s 41 plants, representing about 5 percent of the manufacturing output by Japan’s largest exporter of consumer electronics. Stringer was stuck on “the wrong side of the world,” he said in an e-mail. Vice Chairman Ryoji Chubachi and Executive Deputy President Yutaka Nakagawa oversaw rescue operations.

Sony Helicopter

Sony sent a helicopter to deliver water and basic necessities to the 1,100 employees and 100 neighbors trapped in a building in Tagajo, Stringer told employees in an e-mail. Engineers built a “make-shift boat” so workers could deliver food to people trapped nearby, he wrote. “Our employees there are working impossible hours to provide support to our employees and operations in the hard-hit areas,” Stringer wrote. It is “too early” to discuss the potential impact of the disaster on Sony’s business and financial results, said spokesman Shiro Kambe. Elpida Memory Inc. (6665) President Yukio Sakamoto learned of the earthquake while aboard All Nippon Airways Co. flight NH1172 from Hong Kong to Tokyo’s Haneda Airport. “The first thing I did when we landed was to try to call our factory directors, purchasing managers and human resources department to find out what happened, but I couldn’t get through,” Sakamoto, who runs the world’s third-largest maker of computer-memory chips, said in an interview. “We’re now sending our customers and business partners daily updates on the situation.”

‘Especially Cautious’

When the earthquake struck, Seiko Epson Corp. (6724) President Minoru Usui was attending a graduation ceremony for the company’s information technology institute in Suwa, central Japan. “The safety of employees was my immediate concern,” Usui said in an e-mail. Fourteen minutes after the temblor, Usui set up a task force at the nearby headquarters of the world’s third-largest maker of printers. The company closed four plants, including one inside the evacuation zone near the crippled Dai-Ichi nuclear plant. A plant in nearby Akita prefecture resumed operations March 22. As analysts try to quantify the impact on corporate earnings -- Deutsche Bank AG estimates a 2.4 percent shortfall, twice that of the Kobe quake -- CEOs may be running out of time in testing investor patience, said Hideaki Miyajima, an economics professor at Waseda University in Tokyo specializing in corporate governance. “They may be especially cautious about what information they make public given the wide-ranging possible scenarios,” Miyajima said. “It’s forgivable to wait until the 28th, two weeks after the plant shutdowns began. If they are silent past then, it may appear that there is a serious problem.”

To contact the reporters on this story: Makiko Kitamura in Osaka atmkitamura1@bloomberg.net; Maki Shiraki in Tokyo at mshiraki1@bloomberg.net; Mariko Yasu in Tokyo at myasu@bloomberg.net.

To contact the editors responsible for this story: Kae Inoue at kinoue@bloomberg.net; Young-Sam Cho at ycho2@bloomberg.net