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emdawgz1 · Joined: 14 Mar 2006 Posts: 7949

http://www.businessweek.com/globalbiz/content/feb2009/gb20090212_424440.htm?chan=top+news_top+news+index+-+temp_news+%2B+analysis

Japan February 12, 2009, 9:01AM EST text size: TT
Pioneer's Plasma TVs: R.I.P.
The high-end sets didn't make enough of a dent as rivals shifted to budget models in a slowing economy. Does Pioneer's exit endanger plasma vs. LCD?

By Kenji Hall

Pioneer Corp. (6773.T), the world's fourth-largest maker of plasma televisions, announced on Feb. 12 that it's pulling the plug on its flat-panel TVs after the economic downturn wiped out its hopes of making the business profitable. The withdrawal of Tokyo-based Pioneer and the dire outlook for TVs this year suggest that an industry shakeup is afoot. Pioneer's drastic steps also highlight how Japanese tech companies are relying less on TVs—the center of the digital living room—as their main branding tool. And that's led to a reordering of a crowded field of more than a dozen Japanese electronics companies. Hitachi (HIT), NEC (6701.T), Fujitsu (6702.T), and Toshiba (6502.T) recently have restructured or ditched money-losing electronics divisions.

Pioneer plans to immediately end in-house development and by March 2010 will close down its TV business altogether. It's focusing instead on audio equipment and set-top boxes as well as car navigation technology. The shift will force the company to eliminate 6,000, or 16%, of its 36,900 full-time staff, and to let go another 4,000 temp and contract workers this year. "It hurts that we have to give up on a business that we were leaders in," Pioneer President Susumu Kotani told reporters. "But market conditions changed too suddenly and we couldn't stay profitable."

In the October-December quarter, the company reported an operating loss of $119 million, from a $77 million gain in the same quarter last year, and sales fell 38% to $1.46 billion. Its net loss reached $290 million, from a $19 million profit last year. The company now expects operating earnings to swing to a loss of $767 million and sales to total $6.2 billion for the year ending in March. (The company's figures from last year were calculated using U.S. accounting standards; this year's will stick to Japanese rules.) Pioneer's hope is that taking a hit now will speed its recovery. "My No. 1 task is to carry out reforms so we can soon be profitable," Kotani said.
Couldn't Grab Enough Market Share

The company once had high hopes for its TVs. In 2007, it targeted well-heeled consumers with a new lineup of high-end sets. But the economy was slowing, prices were dropping, and flat-panel TV makers were shifting to budget models. Pioneer couldn't close the gap with Panasonic (PC) (37% share), Samsung (23%) and LG (16%), despite a 24% rise in global plasma TV sales to 14 million sets last year, according to Austin (Tex.)-based research firm DisplaySearch.

Last spring, Pioneer announced that it would stop making its own plasma panels to save billions of dollars on factory and equipment spending, leaving just three plasma panel manufacturers. Later Pioneer signed a deal to buy panels from Japanese rival Panasonic. But by October of last year, the market turned south: In the fourth quarter alone, Pioneer's revenues from plasma TVs fell 29%, according to DisplaySearch.

The market is divided into two camps. At the big-screen pricey end, Samsung, Sony (SNE), Panasonic, LG, and Sharp (6753.T) have solid positions, manufacturing high-end sets and outsourcing smaller ones. In small- and midsized screens, where margins are razor thin, low-cost brands and Asian manufacturers slug it out for market share.
Panasonic Delays Plasma-Panel Plant

Historically, plasma had a technological and cost advantage in the big screens over LCD. Early on, plasma makers showed that their sets run on less energy than liquid-crystal-display TVs. But LCD makers are making bigger sets—and that might have swayed Pioneer to bail. No doubt the economic downturn, the strong yen, and this year's forecast for single-digit growth in TV sales (a mere 5% rise to 14.6 million units, according to DisplaySearch) made the decision easier.

It's unclear how Pioneer's exit will impact other TV makers. Panasonic has a huge bet on plasma sets. Its president, Fumio Ohtsubo, worries about the thinning ranks of plasma makers, and last year added LCD TVs to the company's product mix. In recent weeks, Panasonic has trimmed spending on TVs and announced it was delaying the opening of its state-of-the-art plasma-panel plant near Osaka.

Hall is BusinessWeek's technology correspondent in Tokyo.

**AnalogRocks** · Posted: Fri Feb 13, 2009 3:33 am Post subject:

Thats funny. Off all the plasma's I've seen the Pionner's were the best Laughing

Oh well just have to stick with CRT I guess.

jask · Joined: 17 Mar 2006 Posts: 10187 Location: kamloops BC

Wow! that is too bad; the Pioneer pro 111 is the best panel I have ever seen. I doubt they will need to discount very much to clear out the inventory they have left.

**AnalogRocks** · Posted: Fri Feb 13, 2009 8:00 am Post subject:

Yep fire sale. I was just going to sugest one to my dad. He was looking for a 50". Ahh well, some other piece o crap will be fine. He can't tell the difference anyhow.

WanMan · Joined: 19 Mar 2006 Posts: 10270

stgdz · Joined: 07 Dec 2008 Posts: 107

WanMan · Joined: 19 Mar 2006 Posts: 10270

**AnalogRocks** · Posted: Sun Feb 15, 2009 6:01 pm Post subject:

Bright, upbeat and pleasant observations Wan Laughing