March 4, 2008 / 12:44 AM / 12 years ago

Pioneer to end plasma panel output, source says

TOKYO (Reuters) - Japan’s Pioneer Corp 6773.T is finalizing plans to stop all production of plasma display panels in a bid to turn around its loss-making flat TV operations, an industry source briefed on the plan said on Tuesday.

An employee reacts in front of Pioneer Corp's plasma televisions at an electric home appliances shop in Tokyo March 4, 2008. REUTERS/Toru Hanai

Shares in the maker of audio-visual products and auto electronics jumped to a four-month high after first reports of the move, and were up 11.2 percent at 1,160 yen as of 12:50 a.m. EST.

Pioneer is the world’s fifth-biggest plasma TV maker, but it has been struggling to compete with larger rivals with better output efficiency such as Matsushita Electric Industrial Co (6752.T), maker of Panasonic-brand electronics.

After the move, Pioneer plans to buy plasma panels for flat TVs from Matsushita, the Nikkei business daily reported. Pioneer is already planning to buy liquid crystal display panels from Sharp Corp (6753.T) to start offering LCD TVs.

“This is an excellent development,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

“Pioneer could have chosen another way and stepped up its plasma investment despite the fact that the business is bleeding red ink, but it’s a wise step to decide against that,” he said.

“A quicker decision would have been even better, though.”

Pioneer has spent a little over 100 billion yen to build four plasma panel production lines and to buy two more lines from NEC Corp (6701.T).

Japanese TV makers have been undergoing a realignment as top manufacturers with ample output capacity such as Matsushita and Sharp look for panel buyers, while mid-tier players seek ways to obtain display panels without making hefty initial investments.

A Pioneer spokesman said the company would unveil its display business strategy when it announces companywide business plans on Friday.

To fight price declines, Pioneer last year launched its “Kuro” series, positioning the TVs as premium products. Executives had said the brand was gaining momentum and would translate into bigger sales in 2008.

Pioneer aims to sell 480,000 plasma TVs in the business year that ends this month, less than one-10th of Matsushita’s sales target of 5 million units.

Withdrawing from the panel business implies the firm will close its panel plant in Kagoshima in southwest Japan, but Pioneer is studying ways to avoid shutting the factory, the source said.

Reporting by Mayumi Negishi, Edwina Gibbs and Kiyoshi Takenaka; Editing by Hugh Lawson

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