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Sharp to take 14% cut of Pioneer to save on DVD costs

Sharp Corp, Japan's largest maker of liquid-crystal-display televisions, will acquire a 14 percent stake in Pioneer Corp for ?41.4 billion (US$358 million) to develop DVD players and car navigation equipment.

Pioneer, Japan's largest car navigation systems maker, will sell 30 million new shares, making Osaka-based Sharp its biggest shareholder, the companies said in a statement today. Sharp will sell 10 million shares, or a 0.9 percent holding, to Tokyo-based Pioneer to cement the alliance.

Investing in Pioneer will help Sharp cut costs in high-definition DVD players and enter the car navigation market.

"Due to advanced digitization of electronic devices and products, the market circumstances for electronic companies continue to become severe," requiring increased investment, Sharp said. "The management sees an opportunity in the strategic business alliance to enhance an efficient differentiation of business and to preserve corporate profits."

Pioneer is trying to reverse a profit slump after being saddled with overcapacity in plasma display panels even as prices keep declining.

"The alliance will enable the companies to reduce costs and shorten development times," said Naoki Fujiwara, who helps oversee US$3.24 billion at Shinkin Asset Management Co in Tokyo. "It's increasingly important for consumer-electronics makers to speedily develop products and recover their investments as the era where everybody was profitable has gone."

Sharp is known for its Aquos brand of LCD TVs, and was the world's third biggest LCD TV maker in terms of revenue last year.
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