Pioneer Struggle In Plasma Market New Factory Canned

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Pioneer which is credited with delivering the best plasma in the world has posted an 80 percent fall in quarterly operating profit due to slow plasma TV sales that cancelled out robust demand for its car electronics products, and it cut its annual outlook to below market expectations.

Pioneer which was forced into a capital alliance with Sharp a few weeks ago enjoys healthy profit margins at its auto electronics unit, which offers car audio and car navigation systems, but its plasma TV operations have been overshadowed by larger flat TV makers such as Samsung Electronics, Sony, Panasonic and Sharp.

Pioneer has also suspended plans for a new plasma television factory owing to disappointing sales for the product, the Nikkei News reported Wednesday without citing sources. In 2006 Pioneer laid out plans to build a 30 billion yen plant on a 100,000 square meter site in the city of Minami Alps before the end of March 31, 2008. Pioneer may now use the site to consolidate its operations. Pioneer, which has targeted production of 720,000 plasma televisions this fiscal year, can reportedly produce 970,000 units annually at its three existing plants.

For the year to March, Pioneer cut its operating profit forecast by one-third to $87.16 million, down from a 12.49 billion yen profit a year earlier and compared with a consensus for a 12.5 billion yen profit in a survey of 14 analysts by Reuters Estimates.

Sharp said last month it would buy about $362 million worth of new shares from Pioneer and work with the loss-making rival in developing DVD players, car electronics and displays, the latest move by Japan’s electronics makers to form alliances to better compete with global rivals.

Pioneer is the world’s sixth-largest plasma TV maker, while Sharp ranks No.3 in the global liquid crystal display (LCD) TV market behind Samsung and Sony, according to DisplaySearch.

Operating profit at Pioneer, battling with Panasonic maker Matsushita Electric and Samsung in the plasma TV market, was 939 million yen in July-September, versus a 4.61 billion yen profit a year earlier.

On a net basis, it booked a loss of 2.4 billion yen, compared with a 3.55 billion yen profit a year earlier. Sales increased 6.3 percent to 200.5 billion yen.

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