Sanyo Electric Co. posted disappointing second-quarter earnings Wednesday amid talks about its sale to Panasonic Corp., which analysts say would benefit from Sanyo'ssolarcell and lithium-ion battery businesses.

Sanyo's net income fell 67 percent to reach 4.4 billion yen ($44 million) from the year-ago period. But strong demand for its batteries has prompted the electronics maker to project a 22 percent gain in the company's overall profit for the fiscal year ending in March 2009, reported the Associated Press.

In the first six months ending Sept. 30, sales from Sanyo's rechargeable battery business shot up to 205.1 billion yen, compared with 171 billion yen from a year ago. Sanyo sells different types of batteries including lithium-ion.

Battery sales contributed 12 percent of the company's revenue in the last fiscal year, making it the largest business segment in Sanyo. The company is the world's largest lithium-ion battery maker.

Speculation about Panasonic's interest in buying a majority stake in Sanyo began last weekend, when the Japanese media reported that Panasonic and Sanyo had reached a preliminary agreement on the sale. Panasonic plans to make a formal offer to Sanyo soon to Goldman Sachs, Sumitomo Mitsui and Daiwa Securities SMBC, which collectively own about 70 percent of Sanyo.

Solar cell and lithium-ion battery operations make Sanyo an attractive acquisition target. The company is the seventh largest solar cell maker in the world and recently announced ambitious plans to expand into the thin-film solar business by making amorphous silicon panels (see Sanyo Builds New Factory, Enters Thin-Film Fray).

Panasonic, the world's largest consumer electronics maker, will gain a slice of the solar market by acquiring Sanyo, which also makes TVs, cameras, home appliances and semiconductors.

Support from Panasonic could sharpen Sanyo's competitive edge as it competes with other Japanese companies and solar businesses from Europe and the United States.

Sharp began running a new thin-film solar production line in Japan last month and plans to launch its first product for the U.S. market next summer (see Sharp Guns for U.S. Thin-Film Market). The new production line brings the total thin-film solar production capacity to 160 megawatts per year, up from 15 megawatts per year. The company has vowed to grab more than 50 percent of the thin-film market by 2012.

Strong demand from the computer laptop market has given Sanyo's lithium-ion battery business a big boost. Lithium-ion batteries are emerging as a popular technology for powering electric cars. Sanyo is developing lithium-ion batteries for Volkswagen. It also sells nickel-metal-hydride batteries to Ford Motor Co. and Honda Motor Co.

Panasonic already is in the car battery business, having created a joint venture with Toyota Motor Corp. called Panasonic EV Energy. Toyota said it plans to start selling plug-in hybrid electric cars with lithium-ion batteries by 2010 (see Toyota Drives Toward Greener Fleet).

Goldman Sachs, Sumitomo Mitsui and Daiwa Securities rescued Sanyo in 2006 by buying a 70 percent stake in the company. Sanyo had posted losses for four years until the last fiscal year ended March 2008. The company sold its mobile phone business to Kyocera earlier this year. 

Join industry leaders and influencers at Greentech Media's new conference series Greentech Innovations: End-to-End Electricity on November 17 and 18 in New York City.