May 15, 2014 2:52 am JST

Pioneer putting AV equipment business on the block

OSAKA -- Pioneer is in talks with Funai Electric and other potential buyers to sell its audiovisual equipment segment, planning to retreat from a field hurt by the popularity of online movies and music.

     The move would allow the Japanese company to focus on its more profitable devices for automobiles. Suitors are negotiating with Pioneer through financial institutions, discussing the value of the company's global brand as well as its production and sales networks. The aim is to strike a deal by July.

     The AV equipment business, including such products as home theater systems and Blu-ray Disc players, generated 108 billion yen ($1.04 billion) in sales -- roughly 20% of the company's total -- in fiscal 2013. Operating profit came to 100 million yen. Pioneer would likely hold onto high-margin parts of the business like disc jockey equipment.

     Funai aims to capitalize on the Pioneer brand, which is well known to consumers in Japan and abroad. Good at making low-cost products but with a relatively weak brand, Funai could possibly prop up its existing businesses by adding the Pioneer name to its devices.

     One of the biggest names in the business, Kawasaki-based Pioneer has a strong reputation for its stereo equipment and was instrumental in bringing laserdisc players and plasma televisions to consumers. Hurt by the weakness of its plasma TVs, the company moved to cut its workforce by 10,000 in 2009.

     Pioneer is on the road to recovery, turning a group pretax profit of 5.1 billion yen on sales of 498.1 billion yen in fiscal 2013.

     The car equipment business, including navigation systems, generates 70% of sales and is seen growing in the future as in-car safety, entertainment and information-providing features become more common.