Pioneer heads to quit

TOKYO – Pioneer Corp.said yesterday its president and chairman will step down to take responsibility for its struggling business, underscoring the plight of Japanese electronics makers amid fierce price competition.

The changes to top management at Pioneer, which competes in plasma TVs and DVD recorders with the likes of Matsushita Electric Industrial Co. Ltd.and Samsung Electronics Co., comes on the heels of restructuring by Sanyo Electric Co.Ltd., another loss-making consumer electronics company.Pioneer shares rose three per cent on restructuring hopes, but Sanyo fell more than three per cent on market disappointment over a lack of specifics in its restructuring plan unveiled.Sanyo’s plan featured a capital rise of up to 300 billion yen (around N$16,9 billion) via new share issues to Goldman Sachs and others and an overhaul in its microchip and home appliances divisions.Citing fears about more restructuring charges, Moody’s Investors Services said it had cut Sanyo’s long-term issuer and debt ratings to Baa2, just two notches away from a speculative grade, and added it may cut them even further.Besides steep price erosion, Sanyo’s earnings have been weighed down by sluggish demand for home appliances, extensive earthquake damage that hit its northern Japan microchip plant last year and restructuring charges.Having been considered winners among Japanese consumer electronics manufacturers up until a few years ago, Pioneer and Sanyo are examples of how quickly fortunes can change in the era of digital electronics, where products can quickly become commoditised, prices slide and margins are razor-thin.To take the blame for its faltering earnings, Pioneer said President Kaneo Ito and Chairman Kanya Matsumoto would resign and become director and adviser, while Executive Vice President Tamihiko Sudo would become its new president on Jan.1.Pioneer expects a record net loss of 24 billion yen in the business year to next March due to tumbling prices of DVD recorders and plasma TVs, markets in which it has not been able to keep up with bigger players.”We are now facing the harshest ever business conditions since our firm was established (in 1947).I will step down to regenerate our management,” Ito told a news conference on Monday.Investors cheered a report in business newspaper Nihon Keizai on Sunday that Tokyo-based Pioneer planned to cut about 1 000 jobs, or 10 per cent of its domestic work force, and scale down its DVD recorder business.President Ito told reporters that Pioneer was still in the process of formulating its latest restructuring steps targeting its plasma display panel (PDP) and DVD recorder business and that an announcement would be made on Dec.8.Ito said it would also focus on car electronics to improve its bottom line, although it did not plan to shrink its home electronics operations.In October, Pioneer said it would unveil additional restructuring steps, beefing up its earlier plan that already called for the loss of 2 000 jobs and closure of a quarter of its plants.Like Pioneer and Sanyo, larger rival Sony Corp.is also forecasting red ink this year, unable to keep up with tumbling prices of key products such as flat-panel TVs.On the other hand, some players such as Sharp Corp.and Matsushita have found success by focusing resources on key products – liquid crystal display televisions for Sharp and plasma TVs for Matsushita.- Nampa-ReutersLtd.and Samsung Electronics Co., comes on the heels of restructuring by Sanyo Electric Co.Ltd., another loss-making consumer electronics company.Pioneer shares rose three per cent on restructuring hopes, but Sanyo fell more than three per cent on market disappointment over a lack of specifics in its restructuring plan unveiled.Sanyo’s plan featured a capital rise of up to 300 billion yen (around N$16,9 billion) via new share issues to Goldman Sachs and others and an overhaul in its microchip and home appliances divisions.Citing fears about more restructuring charges, Moody’s Investors Services said it had cut Sanyo’s long-term issuer and debt ratings to Baa2, just two notches away from a speculative grade, and added it may cut them even further.Besides steep price erosion, Sanyo’s earnings have been weighed down by sluggish demand for home appliances, extensive earthquake damage that hit its northern Japan microchip plant last year and restructuring charges.Having been considered winners among Japanese consumer electronics manufacturers up until a few years ago, Pioneer and Sanyo are examples of how quickly fortunes can change in the era of digital electronics, where products can quickly become commoditised, prices slide and margins are razor-thin.To take the blame for its faltering earnings, Pioneer said President Kaneo Ito and Chairman Kanya Matsumoto would resign and become director and adviser, while Executive Vice President Tamihiko Sudo would become its new president on Jan.1.Pioneer expects a record net loss of 24 billion yen in the business year to next March due to tumbling prices of DVD recorders and plasma TVs, markets in which it has not been able to keep up with bigger players.”We are now facing the harshest ever business conditions since our firm was established (in 1947).I will step down to regenerate our management,” Ito told a news conference on Monday.Investors cheered a report in business newspaper Nihon Keizai on Sunday that Tokyo-based Pioneer planned to cut about 1 000 jobs, or 10 per cent of its domestic work force, and scale down its DVD recorder business.President Ito told reporters that Pioneer was still in the process of formulating its latest restructuring steps targeting its plasma display panel (PDP) and DVD recorder business and that an announcement would be made on Dec.8.Ito said it would also focus on car electronics to improve its bottom line, although it did not plan to shrink its home electronics operations.In October, Pioneer said it would unveil additional restructuring steps, beefing up its earlier plan that already called for the loss of 2 000 jobs and closure of a quarter of its plants.Like Pioneer and Sanyo, larger rival Sony Corp.is also forecasting red ink this year, unable to keep up with tumbling prices of key products such as flat-panel TVs.On the other hand, some players such as Sharp Corp.and Matsushita have found success by focusing resources on key products – liquid crystal display televisions for Sharp and plasma TVs for Matsushita.- Nampa-Reuters