Pioneer to Stop Building Plasma Televisions

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Pioneer May Pull Plug On Plasma

Vivian Wai-yin Kwok, 03.04.08, 1:52 AM ET
Forbes

HONG KONG -

Pioneer is reportedly planning to hit the off button on its money-losing plasma panel business, and investors are happy at the prospect of a change in programming.

Shares of the Japanese home and car electronics producer soared 11.7%, or 122 yen ($1.18), to close at 1,165 yen ($11.25) on Tuesday in Tokyo.

Pioneer is finalizing plans to stop production as early as this year and begin purchasing plasma panels from the world's No. 1 producer, Matsushita Electric Industrial (nyse: MC - news - people ), the business daily Nikkei said Tuesday. Kyodo News also reported Pioneer would source display panels from others to reduce cost.

Pioneer spokesperson Ema Suzuki confirmed the company is reviewing its plasma display business due to sluggish sales, but stressed that no decision had been reached as of Tuesday.

Pioneer will unveil its latest business plans at a press conference this Friday.

Pioneer has cut its forecast on plasma panel shipments to 480,000 units for the fiscal year ending this March, sharply lower than its initial estimate of 720,000 sets. The manufacturer is expected to report a loss of more than 10 billion yen ($96 million) on the plasma TV division, according to Nikkei.

Pioneer was ranked No. 5 with 7.3% market share in the global plasma TV in 2007. The Tokyo-based company currently manufactures panels for 42-, 50- and 60-inch plasma TVs at plants in Kagoshima, Yamanashi and Shizuoka prefectures. The site in Kagoshima will be shut down and the remaining two will be shifted to focus on assembling televisions, Nikkei said.

Pioneer's exit would leave only Matsushita and Hitachi (nyse: HIT - news - people ) producing plasma display panels in Japan.

Amid severe competition from Taiwanese manufacturers, Japanese TV makers have gone through a series of shake ups, moving away from a vertical integration model, in which they made everything, to outsourcing parts production to enhance efficiency.

Sony (nyse: SNE - news - people ) announced last month that it would invest in a Sharp plant for making liquid crystal displays. Before that, Matsushita, Hitachi and Canon (nyse: CAJ - news - people ) announced a tie-up in their LCD businesses.

The Associated Press contributed to this article.