Toshiba Lays Off 279 as It Drops CRT-Based Rear Projection TVs

The winding down of the CRT rear projection business has already hit component suppliers including MT Picture Display and Hitachi, both of which have imposed job cuts at tube-making factories in Troy, O., and Greenville, S.C., respectively. Kimball International, a major provider of wood cabinets for projection TVs, also is weighing stopping production, CFO Richard Schneider said. In June, Kimball incurred $4.4 million in pre-tax costs to lay off 200 workers as it combined a TV cabinet plant in Mexicali, Mexico with a facility in Juarez. Among Kimball’s major customers for rear projection TV cabinets is Mitsubishi.

“We often look at lots of our businesses to assess profitability,” Schneider told us. “Clearly this is a case where the industry is headed in a different direction and it’s going to be a question of managing the exit” from the TV cabinet-making business.

For Toshiba, which marketed 3 CRT-based rear projection TV models (two 51Ws and a 57W) this year, the decision ends a production run that began in 1989. The Lebanon factory will continue assembling 46W-72W DLP-based rear projection TVs and Toshiba also will field 13 models of 13-34W direct-view digital CRT sets in 2006, all of which will be imported from the Far East, Vp Scott Ramirez said. Toshiba gradually phased out direct-view assembly at the Lebanon facility last year, Ramirez said. The move by Toshiba to discontinue CRT rear projection also is a blow to its tube making joint venture with Matsushita. MT Picture Display has now lost its joint venture partners as OEM customers for rear projection tubes.

At the Toshiba plant, 60 workers will be let go by Dec. 31, while another 119 are to be let go in late Jan., a spokeswoman said. The plant, which opened in 1978, currently employs 1,100. “There is a very small market” for CRT rear projection TVs and the “price points are becoming quite distressed” as they dip below $1,000, Ramirez said. For its part, DLP-based models will likely hit $1,500 in 2006 for an entry-level product, industry officials said.

Toshiba’s decision to remain in direct-view was driven largely by it strong market share position, Ramirez said. In the Jan.-Sept. period, Toshiba had leading market share at 13.34%, followed by Sony (13.15%), Magnavox (10.26%), Symphonic (8%) and RCA (7.59%), industry officials said. “I don’t think it’s [direct-view CRT] is going to shrink as dramatically as some people think it is,” Ramirez said. Indeed, industry officials expect direct-view digital TVs to form a beachhead around the sub-$600 retail price to ward off LCD models, industry officials said.

Kimball swung to a $6.5 million first-quarter loss from a $5 million profit a year earlier as it took a $4.8 million pre-tax charge to cover restructuring of its furniture and cabinets business, which includes projection TV. Much of the charge -- $3.5 million -- was related to enterprise resource planning (ERP) software that was abandoned before being put into service. Overall revenues increased to $270.6 million from $261.9 million. But the gain in furniture and cabinets to $162.4 million from $153.9 million was offset by a 10% decline in private label products, which includes TV cabinets, to $24.5 million from $27.2 million. Kimball officials didn’t release sales total for TV cabinets. Furniture and cabinets posted a $1.2 million operating loss during the quarter vs. a $2.4 million profit a year earlier.

In electronic contract assemblies, which included sales of braking systems to TRW Automotive, Kimball revenues rose to $108 million from $107 million as operating profit declined to $819,000 from $2.8 million. Kimball is opening a new assembly facility in Nanjing, China this month, company officials said.

Kimball ended the quarter with $35.8 million in assets being held for sale including a hardwood forest products business and fixed-wall furniture system. In Oct., Kimball struck a preliminary agreement with a buyer for the fixed-wall business, Pres. James Thyen told analysts in an earnings conference call on Thurs. The restructuring costs for the furniture and cabinets segment, including the sale of businesses and combining of factories, is expected to total $18.2-$20.7 million, company officials said. -- Mark Seavy

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Like many of its larger competitors, Bang & Olufsen (B&O) also is revamping its TV business in switching to an all flat panel line from CRTs, Pres. Torben Ballegaard Sorenson told us. B&O discontinued a majority of its direct-view sets earlier this year, but plans to keep one model -- the 20” MX4200 -- in the line for another year because of its popularity. Dropped were a 27” model as well as the BeoVision 32W combo TV/DVD player. The sets are initially being replaced by plasma. B&O is fielding 65W ($25,000), 50W ($9,999), 42W ($7,499) and 37W ($5,400) plasma TV monitors that feature Panasonic panels and are paired with a video processor ($5,000). B&O is marketing 32W and 40W combo LCD TV/DVD player in Europe. But it’s holding off delivering the 40W in the U.S. until a new global chassis design is finalized in 2006, Product Mgr. David Zapfel said. The chassis, which will undergo testing in the U.S. this month and in Jan., will start production in March-April, Zapfel said. The new chassis will be implemented first in plasma TVs before moving to LCD TVs in fall 2006, Zapfel said. In LCD TVs, B&O uses a variety of suppliers including Samsung (40W) and AU Optronics (32W).