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UPDATE 2-Pioneer to exit flat TV market, cut 10,000 jobs

(Adds details, analyst comment)

TOKYO, Feb 12 (Reuters) - Japanese electronics maker Pioneer Corp 6773.T said it would cut 10,000 jobs and pull the plug on its loss-making flat TV business, a move that could signal a further shake-out in the battered sector.

Pioneer, a niche player in the plasma TV market and one of the world’s top makers of car electronics, also warned of a record annual loss of 130 billion yen ($1.4 billion) after being hit, like its rivals, by weak demand and a strong yen.

The company, unable to keep up with larger, more efficient producers like South Korea's Samsung Electronics 005930.KS and Japan's Panasonic Corp 6752.T, said it would withdraw from the flat TV business by March 2010.

Pioneer launched the world’s first plasma TV in 1997 and for a short while carved out a valuable niche in high-end models.

“It is extremely painful to give up a business we have built up as a pioneer in the industry,” President Susumu Kotani told a news conference.

Pioneer controlled just 5.9 percent of the plasma TV market in the first nine months of 2008, compared with Panasonic’s 37.2 percent and Samsung’s 22.8 percent, according to research firm DisplaySearch.

Other second-tier makers may also be forced out. Those struggling to gain traction in the flat-TV market include Mitsubishi Electric 6503.T, JVC Kenwood Holdings 6632.T and Hitachi Ltd 6501.T.

“Since Pioneer’s flat TV operations are relatively small, this doesn’t mean things will get better for remaining Japanese TV makers. They will still face stiff competition from overseas makers,” said J.P.Morgan Securities analyst Yoshiharu Izumi.

“The trend seems to be that only big players can survive in the flat TV industry. It is getting really difficult for mid-sized makers to distinguish their products from rivals’ with technological expertise alone.”


Pioneer said it would cut 6,000 regular employees and 4,000 temporary and contract staff. Those cuts will come on top of the 5,900 jobs it already shed between last March and December and which reduced its global workforce to 36,900.

Pioneer also said it was in talks with Sharp Corp 6753.T to set up an optical disc joint venture, and its home electronics operations will be scaled back to handle only such products as audio equipment and cable TV set-top boxes.

The decision to pull out of flat TVs was flagged by the company on Saturday when it said it was weighing various options including all-out withdrawal and termination of in-house TV production.

Pioneer now plans to focus resources on its car navigation systems and other auto electronics products.

Pioneer’s car electronics division had until recently been profitable, in contrast to its home electronics operations.

But profitability at the cash cow operations came under pressure in recent months due to slumping car sales worldwide. The company expects the division to post its first ever annual loss for the year to March.

Pioneer warned on Thursday that it now expected to post a net loss of 130 billion yen for the year to March 31, its fifth-straight year of annual loss, compared with the company’s prior forecast for a loss of 78 billion yen.

It cut its sales forecast by 20 percent.

Pioneer said it was likely to remain in the red in the next business year starting April 1 due to restructuring costs but aimed to turn profitable in the year beginning April 2010.

Prior to the announcement, shares of Pioneer closed up 0.6 percent at 178 yen. The benchmark Nikkei average .N225 lost 3 percent. (Editing by David Cowell)