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Appeared on: Thursday, December 08, 2005
Pioneer Announces Business Restructuring Plans

Pioneer today announced its business restructuring plans. The company plans to centralize its management business in Japan, changes its plasma display product plans, focuses on its mobile entertainment business while it cuts off employees in an effort to return to profitability.

First of all, in connection with the business restructuring plan, Pioneer's board of directors elected Mr. Shinji Yasuda as executive officer, in charge of the Home Entertainment Business Group, as of January 1, 2006.

Pioneer plans to improve its management efficiency through organizational restructuring. For the entire Company to operate optimally, it will dismantle the current ?internal company? system as of January 1, 2006, and reorganize it into a two-department setup featuring the Home Entertainment Business Group and the Mobile Entertainment Business Group. All operations related to plasma displays, DVD products and home audio products will be integrated into the Home Entertainment Business Group, based in Japan.

As part of its efforts to reduce fixed costs for the entire group, Pioneer will consolidate its worldwide production sites from 40 to about 30, and in this regard, it will cut about 2,000 employees, mostly at overseas production sites.

Pioneer will also reduce the overall investments in R&D. The company?s R&D expenses currently account for almost 8% of its consolidated net sales. Pioneer said it will try to lower the burden of R&D expenses by stepping up cooperation and alliances with other companies, thereby reducing the ratio of R&D expenses below 7%.

Furthermore, Pioneer will delist its shares from the New York Stock Exchange, Euronext Amsterdam and Osaka Securities Exchange.

In the OEM business, Pioneer did not disclose and specific plans but it left open the possibilities of business collaboration and tie-ups.

Car audio Business

The company will focus on its mobile entertainment business, with plans to strengthen after-market car audio business, and to maintain a dominant share in this market especially in Brazil, Russia, India and China.

In terms of products, Pioneer believes that the more widespread music distribution and digital broadcasting will give the company more ways to continue proposing new values and performances.

The mobile entertainment business includes the car navigation system business. Pioneer plans to aggressively develop overseas markets in which car navigation system ownership rates are still low. Pioneer will expand its cooperation with car dealers/manufacturers, by offering new products such as car navigation systems based on the ITS (Intelligent Transport Systems) and Telematics.

Restructuring of Display Businesses

Although Pioneer will remain in the plasma display business, it will minimize dependence on its OEM operations. The company will focus on selling finished Pioneer brand products. Accordingly, Pioneer will review its panel production capacity, and may suspend even more line operations, in accordance with market demands.

Plans for mass-producing active-matrix organic light-emitting diodes (OLEDs) will be discontinued, because the company says it cannot anticipate profitability in this business. However, Pioneer will continue R&D on active-matrix OLEDs, with the aim of benefiting from its patents related to them. The company will also withdraw from the thin film transistor (TFT) substrate business ? which Tohoku Pioneer Corporation had been carrying out under the joint venture ELDis, Inc. ? on the premise that ELDis has been dissolved.

As for the passive-matrix display business, Pioneer will boost adoption of this display.

Specifically for the plasma products, Pioneer will focus on the developments in high resolution panels, focusing on 50 inch full HD plasma displays with 1,920 x 1,080 pixels to be launched at an early stage next fiscal year.

Optical discs business

In the DVD recorder business, Pioneer has already discontinued developing low-end products sold in Europe and US, due to low prices.

In terms of LSIs and software development, Pioneer will promote tie-ups with other companies. Production of low-end DVD recorders and VCR-combo DVD recorders will be shifted to subcontractors, in order to improve profitability.

As for recordable DVD drives for personal computers (PCs), Pioneer will focus on slim drives for notebook PCs, while it shifts core development to drives for Blu-ray Discs.

Pioneer will also continue to strengthen sales of DVD recorder drive units to non-Pioneer group companies. In the current fiscal year, the company expects to supply 3 million such drive units, which account for roughly 20% of the worldwide recorder market. It plans to double this figure to 6 million units next fiscal year, with the aim of capturing 30% of the world market.

In addition, this year Pioneer developed a DVD recorder unit exclusively using 8 cm DVDs and began supplying it for use in DVD camcorders.

Home audio business

The home audio business is where Pioneer began. Pioneer's slogan ?Move the Heart, Touch the Soul,? has been Pioneer?s goal since the company was founded. The entire Pioneer Group will boost its audio related activities. Its products will include not only a lineup of premium home theater systems but also audio systems that upgrade PCs and TV sets into full-scale personal theaters, and products fully compatible with portable digital audio player connections.

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