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Panasonic restructures as crisis bites

Japanese electronics maker Panasonic Corp will cut its investment in two new flat-screen TV plants by about $1.5 billion and exit unprofitable businesses as the global economic slump slices into its profits.

Weakening economies around the world have been slowing demand for flat TVs, digital cameras and other electronics products, and prices are plummeting as makers try to clear piling inventories.

Panasonic, the world's largest plasma TV maker, had said in November it would need to restructure to cope with a downturn that has already forced Sony Corp and other rivals to shutter plants and cut jobs.

The company, which changed its name from Matsushita Electric last year, said it would cut investment through 2012 on two flat TV plants under construction in Hyogo prefecture, near Osaka, by ¥135 billion ($1.5 billion) or 23% to ¥445 billion.

The factory in Amagasaki city is expected to start producing plasma panels from May this year, while a plant in Himeji city is scheduled to begin making liquid crystal display (LCDs) panels, from January 2010.

Panasonic also said it may withdraw from businesses that have lost money since the financial year ended March 2007, including operations of Sanyo Electric, a smaller rival it is set to acquire this year for up to $9 billion.

In November, Panasonic cut its annual net profit forecast by 90% and said it would book ¥130 billion in additional restructuring costs for the year to March.

Research firm DisplaySearch has forecast the LCD TV market to grow 17% in 2009 in unit terms, slowing from a 29% increase in 2008.

Plasma TV growth is expected to suffer an even sharper slowdown, with total market size seen growing only 5% in 2009 compared with a 24% rise in 2008, DisplaySearch said. (Reuters)