Struggling Japanese electronics maker Pioneer said yesterday both its chairman and president would step down to take the blame for mounting losses, promising drastic reform to revive the business.
Pioneer said president Kaneo Ito and chairman Kanya Matsumoto, son of the company's founder, would leave their posts to take responsibility for the recent poor sales of DVD recorders and plasma televisions amid a price war.
Vice president Tamihiko Sudo was appointed the new president, effective from Jan. 1, by the board of directors.
PHOTO: AFP
"Business has worsened on an unprecedented scale since the company was set up [in 1947]," said Ito, expressing responsibility for failing to successfully steer the company through developments in digital products.
He said Pioneer would unveil "a drastic structural reform plan" on Dec. 8 and apologized to shareholders, employees and client companies.
Incoming president Sudo, 58, said that in order to boost its profitability the group would focus more on car audio and navigation systems, a division he has previously headed.
Pioneer, like many other Japanese electronics goods makers, is streamlining its operations in response to rapidly falling prices of DVD recorders, flat-panel televisions and other home digital products.
The firm was literally a pioneer in home-use digital electronics, launching the first plasma-display TVs in 1997 and DVD recorders in 1999.
The prospect of further restructuring boosted the company's stock price, which ended up ¥50 or 3.07 percent at ¥1,678. At one point it was more than eight percent higher.
The firm is believed to be planning to cut more jobs and scale down its DVD recorder operations after falling to an interim net loss of ¥12.26 billion US$105 million from a profit of ¥4.81 billion a year earlier.
The Nihon Keizai Shimbun business daily said Pioneer planned to cut 1,000 jobs or 10 percent of its domestic workforce, in addition to a plan announced in March to reduce payrolls by 2,000, mostly overseas.
The Mainichi Shimbun daily said Pioneer would further reduce production capacity of plasma displays, having already halted two of its six lines.
Pioneer recently warned it expects a net loss of ¥24 billion in the year to March but newspapers are saying the company could sink deeper into the red because of the restructuring measures.
Sudo said that Pioneer "will go back to its starting point."
"We started with [audio] speakers and expanded our business domain to home audio devices, car audios, car navigation systems and then visual products.
"But our confidence on whether we are providing products customers really appreciate has recently been wavering," he said.
Sudo said it was only natural for the company to "drastically review" plasma display and DVD recorder operations as they are the main cause of its recent business deterioration.
Pioneer had made large investments in plasma TVs but has not got enough returns yet and appeared not to be making the most of the group's strength.
The company would focus more on car electronics, which it believes has significant growth potential overseas, he said, adding that Pioneer would also consider joint ventures with other companies.
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