Pioneer to log ¥15 billion loss on plasma display exit

by Hiroko Nakata

Pioneer Corp. said Friday it expects to suffer a ¥15 billion group net loss in the business year to the end of this month due to its decision to terminate its plasma display panel production.

It will be the fourth consecutive annual loss for the consumer electronics maker. The estimated loss contrasts with a previous forecast announced in January of a ¥6 billion group net profit for the same year.

Pioneer formally announced its plan to withdraw from manufacturing plasma display panels when production of the next model ends, citing the huge development costs and intensifying competition. It did not specify when output will actually end.

The firm will instead procure plasma display panels from Matsushita Electric Industrial Co. for its own TV output as part of its cost-reduction efforts. It may also consider joint development of plasma panels with Matsushita.

“As for procurement of the panels, we are in talks with Matsushita on our plans, including the possibility of using Pioneer’s technology,” President Tamihiko Sudo told a news conference. He added that the company will release the details in May.

The company said it is expecting the ¥15 billion loss because it will write down plasma display production facilities worth ¥19 billion.

Pioneer aims to return to profitability in the home electronics business in the business year to March 2010. It plans to improve profitability by restructuring the plasma display business and focusing on other home electronics, including audio and video products and next-generation Blue-ray DVD players.

Pioneer said it will also seek to expand its profitable car navigation business.

Pioneer’s move to stop producing plasma display panels would leave Matsushita and Hitachi Ltd. as the only producers of the panels in Japan.

Pioneer currently produces 42-, 50- and 60-inch plasma display panels and large TVs using such panels at its plants in Kagoshima, Shizuoka and Yamanashi prefectures.

Japanese electronics companies are facing a fierce price-cutting and product development battle with Taiwanese and South Korean makers in the flat-screen television business. Plasma display and liquid crystal display panel TVs are also competing head to head for market share.

In September, Pioneer said it was entering the LCD TV business through a capital tieup with Sharp Corp.