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updated 12/27/2007 11:07:22 AM ET 2007-12-27T16:07:22

Sony is dropping its money-losing rear-projection TV business worldwide to focus on two flat panel technologies — liquid crystal display and organic light-emitting diode, the company said Thursday.

Sales of rear-projection TVs had been declining recently as LCD TVs gain in popularity and get bigger, Sony Corp. spokesman Shinji Obana said.

In October, Sony lowered its global sales forecast for rear-projection TVs — which uses a projector to create images on large screens — to 400,000 from 700,000, which is down from 1.1 million the previous fiscal year.

By contrast, Sony expects to sell 10 million LCD TVs this fiscal year through March, up from 6.3 million the previous year.

Sony sells 85 percent of its rear-projection TVs in the United States, and about 10 percent in Europe, according to Obana. Production at the three plants that make the rear-projection TVs in Japan, Mexico and Malaysia, will be halted, Obana said.

The decision to abandon rear-projection TVs underlines Sony's strategy of focusing on LCDs and OLEDs at a time when competition is heating up in flat TVs.

In the fiscal half-year through September, Sony lost $526.3 million in its TV operations, partly because of losses tied to rear-projection TVs. Diving prices of LCD TVs also contributed to the red ink, Obana said.

The world's electronics makers are all working on LCD technology for TVs, as well as another technology called plasma display panels, or PDP.

Earlier this month, Sony began selling a small 11 inch TV that uses a relatively new but expensive flat-panel technology called OLED. Sony's XEL-1 measures just 3 millimeters, or 0.12 inches, thick and delivers clear, vivid images.

Earlier this week, Matsushita Electric Industrial Co., which makes Panasonic brand products, Hitachi and Canon forged a tie-up in their liquid crystal display businesses — another sign of how Japanese electronics makers are being forced to work together to compete globally.

Sony has an alliance with South Korea's Samsung Electronics in LCDs.

Sharp Corp., another major Japanese LCD maker, formed a partnership with Toshiba Corp. last week. Under the deal, Toshiba will buy LCD panels from Sharp for its TVs.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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