Panasonic is defending its $ 7bn Blue Yonder contract after price inquiries

Panasonic has a track record of purchasing but the Japanese agency recommends that the purchase of Blue Yonder $ 7.1bn worth less because it will help address its major weaknesses at the end of the program.

The complex ideas behind the Panasonic consortium have spread to Japanese companies, which have already done well in the modern era of electronics. But it has struggled because the global demand is being turned into software and into the production of technology companies such as Apple and Amazon.

In March, Hitachi agreed to buy GlobalLogic, a Silicon Valley software development company, worth $ 9.5bn.

“When everything is digital, it becomes difficult to differentiate through tools,” Yasuyuki Higuchi, Panasonic’s chief executive who runs his connected business, said in an interview. “Naturally we have a real problem and we need to have programs.”

The former Microsoft business leader in Japan oversees negotiations with get Blue Yonder and has been on the board of the US supply chain software company since Panasonic gained a 20% stake last year.

Following the announcement of the deal on April 23, shares in Tesla’s butter sales fell by almost 14%. Advertisers rallied for the rising price and questioned whether Japanese company executives could handle such large purchases in other companies.

Panasonic struggled with its biggest acquisition: the purchase of the MCA in 1990, then the owner of Universal Pictures, for $ 6.6bn and taking ¥ 800bn from its younger counterpart Sanyo Electric and another subsidiary in 2011.

The researchers also inquired about the benefits of recent operations including the acquisition of $ 1.6bn in 2015 from Hussmann, an American manufacturer of refrigeration electronics.

“We believe Panasonic has a weak track record especially when it comes to high prices,” Jefferies analyst Atul Goyal said in a recent report.

Higuchi said the Blue Yonder deal was severed in the past as it was the software company’s business that relied on it. The U.S.-based firm, which operates 3,000 companies including Coca-Cola and Walmart, made $ 1bn in sales last year, of which 67% was recurring revenue.

“With such a high recurrence rate, their money seems to be worthwhile,” Higuchi said. “We’ve also been able to keep supervisors so the success rate is huge.”

However, analysts question whether the two companies could have done better with the full ownership of Panasonic which the Japanese company could not have done by 20%.

The price of Blue Yonder companies has jumped from $ 5.5bn last year to $ 8.5bn even though its costs remained. Employment rates have fallen 1.7% from 10% in the last three years.

Panasonic regulators want to expand the Blue Yonder client base in Japan and integrate its tools, such as security cameras and sensors, with a US team program to improve its management.

Putting aside the price, Citigroup researcher Kota Ezawa said the latest findings have solved some of the problems Panasonic faced.

“They need a repetitive type of business, a great software program and a way to get in and share to do business from Japan, which is why all of this is what they need to survive the competition,” Ezawa said.

“That fact fills a number of gaps, but obviously this is not all the answer to how Panasonic is changing software and subscription function.”