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Pioneer Home A/V Sees Flexibility In New Subsidiary Status

2/15/2013 11:15:00 AM Eastern

Long Beach, Calif. - The consolidation of Pioneer’s home A/V business unit in Japan with two other business units will turn the unit into a leaner wholly-owned subsidiary.

Russ Johnston, executive VP of home entertainment and corporate communications at Pioneer Electronics USA, said the move will speed up product planning, time to market, and a return to home A/V profitability.

The home A/V business includes engineering and product planning for global markets. The other two units that will be part of the subsidiary are the company’s wired phone business, which largely sells into the domestic market and the company’s domestic home-A/V sales operation. The restructuring was announced Feb. 12.

The new subsidiary, which will be responsible for its own profit-and-loss statement, will be home to all product development and engineering staff, sales management and back-office functions for the three business units, Johnston said. The consolidation will improve control of SG&A and enable the three groups to make speedier product planning and development decisions, he continued.

In choosing whether to build a product in one of Pioneer’s factories or through an outside factory, for example, fewer people will have to be included in the decision, he explained. Subsidiary status will also give the business units more flexibility to use resources inside and outside of Pioneer to develop products, he added. “There will be less process to go through,” he explained.

The subsidiary will also be able to “make the business unit more profitable in a faster manner” because, in having its own SG&A expenses and P&L, it will be able to manage itself more effectively, Johnston added.

The reporting structure, including product-needs communication, between Pioneer USA’s home-A/V division and Japan’s home-A/V executives will “stay exactly the same,” Johnston noted.

He also said the changes will not disrupt 2013 U.S. product plans, which call for 14 new A/V receivers in the Pioneer and Elite lines by the end of the summer, he said.

The consolidation will be complete in July, said a spokeswoman for Pioneer Corp. in Japan. Although a Pioneer financial statement said the three business units would be “spun off,” she noted that “there's no transaction of shares or stocks with other investors outside of Pioneer groups.”

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