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Pioneer Details Exit From PDP Manufacturing

Pioneer said its recent decision to end plasma display panel production would result in a one-time cost of $185.5 million, and is expected to help the home electronics business become profitable by 2010.

“This move will allow us to transform our business model for displays from vertically integrated, capital-intensive operations to a leaner business model geared to making value-added product proposals,” the company said in its financial statement. “Pioneer is currently in discussions on the feasibility of procuring panel modules that may incorporate the company’s proprietary technologies.”

At the same time Pioneer made the announcement it also released its net outlook for its fiscal year ending this month and said it would have a $144.86 million loss after estimating a $57.9 million profit. The company will now post a loss for a fourth consecutive year after showing a $65.29 million loss in fiscal 2007. It did not specify how many panels it expected to acquire from likely supplier, Panasonic.

Earlier, Pioneer had cut its estimates for sales of plasma TV sets to 480,000 units from original projections of 720,000 sets for the current fiscal year ending this month.

Going forward, Pioneer will continue to assemble and sell finished plasma sets, and will continue research and development into plasma technology, applying back-end electronics to improve picture performance.

Pioneer currently manufactures plasma panels for 42-, 50- and 60-inch plasma TVs at plants in Kagoshima, Yamanashi and Shizuoka prefectures, but the company said it has not yet decided if it will close down any of the plants. A restructuring plan is expected around May.

Pioneer also said it expects to expand its TV assortment with LCD TVs through its partnership with Sharp that was announced last fall, where Sharp took a 14.3 percent stake in Pioneer to become the company’s largest shareholder. (For more information, see the interview with Pioneer’s Russ Johnston below for details on the LCD TV move in the United States.)

To “compensate for cutbacks in the plasma display business” Pioneer said it will emphasize car electronics, its professional sound & visual business, which involves DJ equipment and the audio/video product business, including Blu-ray Disc-related products.