April 16, 2008 / 2:07 AM / 10 years ago

JVC mulls scale back of Japan LCD TV ops: source

TOKYO (Reuters) - Struggling electronics maker JVC 6792.T is considering drastically scaling back its home-use LCD TV operations in Japan, a source with direct knowledge of the matter said, in a move to focus on faster-growing overseas markets.

Expectations of such a move, reported earlier on Wednesday by the Nikkei business daily, sent JVC shares up more than 11 percent.

“People seem to like the idea of JVC moving out of the highly competitive Japanese market, especially because it still has pretty strong brand appeal in Europe,” said Yoshihisa Okamoto, fund manager at Mizuho Asset Management.

JVC, Pioneer Corp (6773.T) and other mid-size electronics makers are having a tough time competing with bigger flat-TV suppliers equipped with larger and more advanced production facilities, such as Samsung Electronics Co Ltd (005930.KS) and Panasonic maker Matsushita Electric Industrial Co Ltd (6752.T).

JVC, however, plans to maintain its liquid crystal display (LCD) TV operations for corporate and public sector clients in Japan, the source said.

The electronics maker, owned 36.8 percent by Matsushita and 17 percent by auto and consumer electronics maker Kenwood Corp 6765.T, is the fifth-largest LCD TV maker in the Japanese market. But its domestic market share fell to 3.1 percent in 2007 from 4.1 percent a year earlier, according to DisplaySearch.

The Nikkei said JVC plans to end domestic production and sales of flat-panel televisions, succumbing to fierce competition, and will instead concentrate on North America and Europe.

The Yokohama-based company aimed to boost its global LCD TV sales by 38 percent to 1.1 million units in the year just ended. It did not give a regional breakdown of that target, but overseas sales account for about 65 percent of JVC’s total revenues.

    JVC plans to unveil its latest LCD TV strategy on April 25, when it announces earnings results for the just-ended business year.

    JVC on Tuesday revised down its net outlook for 2007/08 for the third time, hit by a firmer yen and a special loss at its LCD TV operations. It now expects a loss of 47.8 billion yen ($470.2 million), the fourth straight year of net loss.

    Pioneer, the world’s fifth-largest plasma TV maker, said last month it would cease production of plasma display panels and start buying the panels from outside suppliers, a move aimed at saving on hefty costs to build and run its own panel plants.

    Shares in JVC closed up 11.6 percent at 231 yen, far outperforming the Nikkei average .N225, which gained 1.2 percent.

    ($1=101.65 yen)

    Editing by Brent Kininmont

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