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Wednesday, December 07, 2005
Pioneer in Talks With Teac on Optical Disc Alliance

Just a few weeks after the agreement between NEC and Sony to set up an ODD joint venture, Pioneer is currently reportedly in talks with Teac to jointly develop components for optical-disk drives.

Although nothing has been finalized yet, it is possible that Pioneer will consider the option to join forces with another ODD manufacturer. Tokyo-based Pioneer is expecting a second year of losses as rival products made in China, Taiwan and elsewhere in Asia have pushed down prices for its televisions and DVD recorders. The concept where "volume leaders" like Taiwan-based makers would push-out the "technology leaders" like Pioneer out of the DVD market could be threatening for Pioneer. Joining forces with Teac could allow Pioneer to return to profits.

"It is 'unlikely' that a decision will be made by tomorrow, when Pioneer announces a mid-term business plan after naming new management," said Akira Muneto, a Pioneer spokesman, responding to a report by Japanese broadcaster NHK, Bloomberg reports. Pioneer is expected to release an official announcement of the new business plan and strategy under Mr. Sudo's new leadership, which will be announced in Tokyo on Dec. 8th.

The cooperation would possibly involve integrating the two companies? pick-up head (PUH) technology, since Teac is still a maker of such parts. Another possibility would be the companies to focus is on next-generation blue-laser ODDs, a move that would strengthen Pioneer's position in terms of technology, and would add pressure to competitive makers in Asia.

Teac shares surged, and are headed for their biggest gain in almost a year.

Sony and NEC said last month they have also reached a basic agreement to set up an optical disk drive joint venture.

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