* Panasonic to fall into red for year to March -Nikkei
* Strong yen, tough competition behind decision -source
* In talks with Japan Display about selling TV panel plant
* Panasonic shares up 3.1 pct vs. flat Nikkei average
* Company spokesman says nothing to announce
By Reiji Murai and Isabel Reynolds
TOKYO, Oct 21 Panasonic Corp will drop
a plan to convert a television panel plant in Japan into a solar
panel factory, hit by an industry price war and a strong yen
that is making exports less competitive, a source with direct
knowledge of the matter said.
Panasonic is also in talks with public-private
venture Japan Display about selling a liquid-crystal display TV
panel plant located in Chiba, not far from Tokyo, said two
sources with knowledge of the matter.
The Nikkei newspaper said on Thursday write-downs on
Panasonic's TV panel plants will push the Osaka-based company
into the red for the year to March, compared with a company
forecast of 30 billion yen in net profit and an analysts'
consensus of 11.6 billion yen.
Panasonic, which has been touting environmental and energy
technology as key growth areas, had planned to convert its
Amagasaki No. 1 TV panel plant in Hyogo prefecture, western
Japan, to solar panel use and export the plasma TV panel
equipment for use at a plant in Shanghai.
But it will now drop the plan and stop producing TV panels
at Amagasaki No. 1, the source said.
Like rival Sony , Panasonic is struggling with
losses in its TV division, and a source told Reuters on Thursday
that Panasonic would slash TV panel production by halting its
state-of-the-art Amagasaki No. 3 plant, which was completed less
than two years ago, and lay off about 1,000 people.
An analyst said the cutbacks in the TV business would be
"It has become a business where it's very difficult to make
a profit," said Ryosuke Katsura of Mizuho Securities.
"That means they need some big writedowns and they are
wading in to do that. It's progress in that they are tackling
one of their problems."
But Katsura noted that dropping plans for battery and solar
panel expansion would create some uncertainty even if the move
was understandable given current exchange rates.
"The reason they bought out Sanyo was to expand into the
energy business. If they are not going to do this, we need some
information about how they are going to grow."
Demand for solar panels is expected to slump in Europe due
to cuts in government funding, while Panasonic is facing harsher
competition from Asian rivals in the domestic market.
A spokesman for Panasonic said the company was considering
various options for its TV panel and solar businesses, but had
nothing to announce at the moment. It declined to comment on its
The robust yen also prompted Panasonic to scrap a plan to
expand a lithium ion battery plant in Japan, a source told
Reuters last month. It is shifting its focus to China, where it
hopes to produce half its output of such batteries the year
starting in April 2015.
Shares in Panasonic closed up 3.1 percent at 776
yen, compared with a flat Nikkei average.
Panasonic, which is losing ground in consumer electronics to
Asian rivals like Samsung Electronics , said in April
it would lay off about 17,000 people in the next two years in a
bid to cut costs and get rid of overlapping businesses after
buying out rival Sanyo.
It is set to report July-September earnings and give a
briefing on strategy on Oct. 31.
South Korean competitors are also feeling the pain from weak
demand for TVs and computers amid an uncertain global economy.
On Thursday, LG Display of South Korea posted a
record loss of 492 billion won.