Japan Flat Panel Display Expo (A model stands by Panasonic's 150-inch high-definition plasma TV display, claimed to be the world
Itsuo Inouye/APA Panasonic 150-inch high-definition plasma TV on display at a 2008 expo in Tokyo.
By Reiji Murai

TOKYO -- Panasonic will pull out of the plasma television panel business by the end of the financial year to March 2014, sources familiar with the situation told Reuters, marking a key milestone in the long-term decline of Japan's TV industry.

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

Panasonic's TV division has been a major contributor to the electronics company's combined $15 billion (9 billion pounds) net loss in its two latest financial years. Its TV business posted an operating loss of 88.5 billion yen ($913 million) in the last financial year.

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

The move also signals the demise in Japan of a technology in which TV makers once invested heavily but has now been overtaken by advances in the liquid crystal display business. Plasma display TVs accounted for less than 6 percent of global shipments in 2012, compared with 87 percent for LCD TVs, according to research firm DisplaySearch.

Squeezed by the strong yen in recent years, Japan's TV makers have also lost their innovative edge against nimbler rivals such as South Korea's Samsung Electronics, with deep resources to spend on research and development.

Sony (SNE), Panasonic and Sharp combined had a less than 20 percent share of the worldwide flat panel TV market by revenue. Samsung had a 27.7 percent share, and LG Electronics had 15 percent.

Panasonic said in a statement Wednesday that it continued to consider various options for the plasma display panel business but that nothing had been decided yet.

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

The move is in line with the strategy adopted by company President Tsuga since he took charge in June 2012. Panasonic is trying to engineer a turnaround away from low-margin consumer electronics goods to products catering to automakers and other business clients.

Tsuga has warned that he would weed out any division that fails to meet a 5 percent operating margin goal within three years. Non-core assets like its health care unit are also being sold as he overhauls the company.

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

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

-Additional reporting by Mari Saito and Chang-Ran Kim.

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