Panasonic to exit plasma TV panel business by end-March 2014

Reuters

* Company to take 40 bln yen impairment charge - sources

* Move earlier than expected, restructuring picks up speed

* TV business has been major contributor to net losses

By Reiji Murai

TOKYO, Oct 9 (Reuters) - Panasonic Corp will pullout of the plasma television panel business by the end of thefinancial year to March 2014, sources familiar with thesituation told Reuters, marking a key milestone in the long-termdecline of Japan's TV industry.

Panasonic had been widely expected to back out of theunprofitable business, but the exit comes sooner than predictedand underlines President Kazuhiro Tsuga's determination to weedout weak operations as he focuses on higher-margin products toend years of losses at the consumer electronics conglomerate.

Panasonic's TV division has been a major contributor to theelectronics company's combined $15 billion net loss in its twolatest financial years. Its TV business posted an operating lossof 88.5 billion yen ($913 million) in the last financial year.

With the closure of its sole plasma panel factory in westernJapan, Panasonic will book an impairment loss of more than 40billion yen on the last remaining factory building in operation,the sources added. The company set aside 120 billion yen tocover restructuring costs at the start of the current financialyear.

The move also signals the demise in Japan of a technology inwhich TV makers once invested heavily but has now been overtakenby advances in the liquid crystal display (LCD) business. Plasmadisplay TVs accounted for less than 6 percent of globalshipments in 2012, compared with 87 percent for LCD TVs,according to research firm DisplaySearch.

Squeezed by the strong yen in recent years, Japan's TVmakers have also lost their innovative edge against nimblerrivals such as South Korea's Samsung Electronics Co Ltd, with deep resources to spend on research anddevelopment.

Sony Corp, Panasonic and Sharp Corp combined had a less than 20 percent share of the worldwide flatpanel TV market by revenue. Samsung had a 27.7 percent share,and LG Electronics Inc had 15 percent.

Panasonic said in a statement on Wednesday that it continuedto consider various options for the plasma display panelbusiness but that nothing had been decided yet.

The several hundred employees in Panasonic's plasmaoperation are expected to be deployed to other parts of thecompany, the sources said.

The move is in line with the strategy adopted by companyPresident Tsuga since he took charge in June 2012. Panasonic istrying to engineer a turnaround away from low-margin consumerelectronics goods to products catering to automakers and otherbusiness clients.

Tsuga has warned that he would weed out any division thatfails to meet a 5 percent operating margin goal within threeyears. Non-core assets like its healthcare unit are also beingsold as he overhauls the company.

Panasonic agreed last month to sell the healthcare business,which makes blood sugar monitoring devices and electronicrecord-keeping systems, to U.S. private equity firm KKR & Co in a $1.67 billion deal.

Shares in Panasonic were down 0.2 percent at 913 yen inmorning trade in Tokyo, in line with a 0.3 percent slip in thebenchmark Nikkei average.

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