Pioneer to Cut 10% of Work Force, Sanyo to Issue New Shares (PIO, SANYY, GS)

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Includes: GS, PNCOF, SANYY
by: Steven Towns

Despite Japan having many of the most advanced consumer electronics products in the world, the sector is extremely competitive and amidst falling prices in CE, some companies have had a harder time than others. Sanyo (ticker: SANYY), which over the past 2-years has been the weakest performing Nikkei 225 stock and Pioneer (ticker: PIO), a struggling rival, both announced further plans that they hope will put them back in the black.

The Nihon Keizai Shimbun reported Pioneer plans to cut 10% of its domestic workforce or about 1,000 employees. It will also scale down its DVD recorder segment. Earlier this year in March, Pioneer said it would cut 2,000 jobs with most of them being overseas. The Nihon Keizai article also stated that Pioneer, which already shutdown 2 of its 6 production lines for plasma displays in October will carry out further reductions in capacity. Last month Pioneer downward revised its planned shipments of plasma displays for the fiscal year ending in March 2006 from 800,000 to 640,000. Investors and traders were bullish however on the latest news of employee reductions sending the stock 3.07% higher on Monday in Tokyo.

Sanyo, perhaps the weakest of all major CE companies in Japan announced Friday that it planned to raise 300 billion yen in capital by issuing new shares to Goldman Sachs (ticker: GS) and other I-banks in order to strengthen its weak capital base, while downsizing its chip and home appliance divisions. Sanyo's shares were among the most declined on Monday trading in Tokyo, down 3.75%.

Source: Nihon Keizai Shimbun, Reuters