According to a Reuters newswire report, in follow-up to a story originally reported by Nihon Keizai Shimbun (NIKKEI) in Japan, Pioneer is expected to make a decision soon on ceasing manufacturing of the plasma panels used in its Pioneer- and Pioneer Elite-branded HDTVs.

Japan's Pioneer Corp is finalizing plans to stop all production of plasma display panels in a bid to turn around its loss-making flat TV operations, an industry source briefed on the plan said on Tuesday.

Shares in the maker of audio-visual products and auto electronics jumped to a four-month high after first reports of the move, and were up 11.2 percent at 1,160 yen as of 12:50 a.m. EST.

Pioneer is the world's fifth-biggest plasma TV maker, but it has been struggling to compete with larger rivals with better output efficiency such as Matsushita Electric Industrial Co (6752.T: Quote, Profile, Research), maker of Panasonic-brand electronics.

After the move, Pioneer plans to buy plasma panels for flat TVs from Matsushita, the Nikkei business daily reported. Pioneer is already planning to buy liquid crystal display panels from Sharp Corp (6753.T: Quote, Profile, Research) to start offering LCD TVs.

In some respects, this is a surprising decision, in that Pioneer has recently fashioned several manufacturing breakthroughs that make their current Kuro displays among the very best HDTV products available. And at the recent Consumer Electronics Show in Las Vegas this past January, Pioneer provided a preview of Kuro plasma panels currently in development. It seems that everyone who witnessed those demos was bowled over by the significant quality improvements to come.

On the other hand, it seems clear now that Pioneer made a bad and costly business decision when it discontinued its CRT TV business and decided to put all of its eggs in the plasma panel basket. Plasma has long been dogged by negative marketing in relation to phosphor "burn in" and the monumentally wrong-headed retail sales pitches that claimed plasma TVs have an abbreviated service life, or that they required periodic, expensive "plasma refills." But one legitimate negative for plasma displays is the reflective nature of the display panel itself, making them a potentially poor choice for buyers with a lack of ambient or room lighting controls.

The bottom line impact of all this negative marketing is that many consumers rule out plasma displays at an early stage in the shopping process. And because Pioneer was selling only plasma TVs, it had no alternative offering for such consumers.

The silver lining here is that Pioneer is planning to continue selling plasma TVs that are built by its rival,  Panasonic. Panasonic has long been one of the quality leaders in plasma displays, only recently eclipsed by the Pioneer Kuro displays. Hopefully the Pioneer-Panasonic manufacturing agreement, if it comes to pass, will also incorporate some technology "know how" transfer.

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