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Thursday, November 16, 2006
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Hitachi Aims to up Margin, May Exit Flat TVs, HDDs
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Japan's Hitachi said on Thursday it aimed to double its operating profit margin in four years and said it could pull out of flat TVs and hard disk drives if they continue to lose money.
Japan's biggest electronics conglomerate announced its new mid-term goals, saying it would make profitable its power systems, flat TVs and HDDs next year, and increase profitability through March 2009.
Hitachi would consider pulling out of the three businesses, as well as looking for partnerships and acquisitions to turn them around, if they failed to meet targets, Hitachi President Kazuo Furukawa told reporters.
JP Morgan analyst Naoki Sato said Hitachi disliked abandoning businesses, but also had a track record of missing its mid-term goals.
Hitachi, whose products range from washing machines to nuclear power plant equipment, said it would strengthen its HDD business by increasing production capacity in China and Thailand and by increasing its line-up of new HDDs using vertical magnetic recording techniques (perpendicular), which increase storage.
The world's No. five plasma TV maker also said it would raise its share through bigger displays and that it would increase its line-up of liquid crystal display TVs through an existing venture with Matsushita Electric Industrial and Toshiba.
"We are focusing on profitability now," Furukawa said.
Hitachi said it would raise its profit margin to 5 percent, almost double the 2.7 percent it posted last year, and would trim down its sprawling operations by cutting subsidiaries to 700 from 885 at the end of September.
It also said it would raise its percentage of overseas sales to 45 percent of total sales in the year ended 2010, from 38 percent last year.
Earlier this week, Hitachi announced it would combine its nuclear power operations with General Electric Co. through two joint ventures in a bid to expand its power business overseas. |
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