The chairman and president of Japanese electronics group Pioneer has quit folllowing poor results, the laying off of hundreds of employees and the closure of a plasma manufacturing plant.

The chairman and president of Japanese electronics group Pioneer has quit folllowing poor results, the laying off of hundreds of employees and the closure of a plasma manufacturing plant. President Kaneo Ito and chairman Kanya Matsumoto will remain as a director and advisor to the firm respectively.

According to Reuter, current executive vice-president Tamihiko Sudo will become president of the firm in January.  Pioneer has warned it expects to unveil a record net loss of $240 for the year as margins shrink. The company has been struggling as it has been forced to slash prices to keep up with its rivals. I will step down to regenerate our management “We are now facing the harshest ever business conditions since our firm was established (in 1947),” Mr Ito told journalists. “I will step down to regenerate our management,” he added.

Pioneer said the pair had resigned to take the blame for “the steep decline in Pioneer’s financial performance due to the smaller-than-planned number of units sold of plasma displays and DVD recorders”.  The firm added that it would carry out a restructuring drive under Mr Sudo’s leadership in an effort to turn around its fortunes.  Reports in the Nihon Kenzai business newspaper suggested the firm could axe 1,000 jobs – 10% of its domestic workforce – and scale back its DVD recorder business.
Japanese electronics firms have been squeezed recently by weak prices – with Sanyo axing 14,000 jobs and selling factories in an effort to cut costs by 70bn yen.
Sony, Hitachi, Toshiba and Matsushita have all issued cautious forecasts for the current financial year, warning that the current price war in the industry is taking its toll. In Australia Pioneer is doing well having established itself as a leading Plasma brand. They are also strong in car entertainment.

Pioneer said Kaneo Ito, its president, and Kanya Matsumoto, chairman, would step down to take responsibility for the group’s disappointing performance. Tamihiko Sudo, vice-president, credited with building up the profitable car electronics business, takes over as president in January. The electronics group also said it would unveil a restructuring programme aimed at returning to profitability on December 8. Pioneer denied it planned to slim down its struggling home electronics businesses and declined to confirm reports that it would cut its workforce by 10 per cent and consolidate manufacturing.

The plight of Pioneer, which reported a Y16bn (US$135m) operating loss in the first half and said it would report a record net loss of Y24bn for the year, highlights the speed of change in the electronics sector. Last week, Sanyo said its full-year losses would be much larger than previously forecast and said it was seeking to raise Y200bn to Y300bn in new funds to boost its capital base. Moody’s yesterday responded by cutting Sanyo’s long-term debt rating one level to Baa2, two levels above junk, and put it on review for further possible cuts. Standard & Poor’s downgraded Sanyo earlier this month.

Although Pioneer’s Mr Ito said the company planned to focus on car electronics, he damped expectations that the group was poised to pull out of loss-making electronics businesses. “We have no intention of shrinking [the home electronics business],” he said.

Mr Ito admitted that Pioneer had not been quick enough to respond to the challenging market environment. But he said: “I am confident that our [strategic] direction was not mistaken.” In particular, Mr Ito and Mr Sudo denied Pioneer planned to pull out of or shrink the PDP operations, which have been a major drain on the group. He conceded that “NEC’s PDP business has become a burden because at this point we are not getting any OEM business [to supply third parties with panels] at all.”

But he said PDP technology still had tremendous potential.