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Hitachi has said that it is considering getting out of flat screen TV’s. The comments came as Hitachi announced that it is attempting to double its operating profit margin over the next four years.
Japan’s biggest electronics conglomerate has struggled in the plasma market despite having a superior product and like fellow Japanese plasma manufacturer Pioneer the Company is seriously having to consider whether the effort is worthwhile up against LCD TV.
Hitachi has said that it would consider pulling out of the three businesses, as well as looking for partnerships and acquisitions to turn their struggling flat screen division around, if they failed to meet targets, Hitachi President Kazuo Furukawa told reporters they would get out of the business.
JP Morgan analyst Naoki Sato said Hitachi disliked abandoning businesses, but also had a track record of missing its mid-term goals.
“Implementation has been a problem,” Sato said. “I would be very surprised if they actually withdraw from any of these businesses.”
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, 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 Co. Ltd and Toshiba Corp. “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.
BROKEN PROMISES
Hitachi has yet to meet the mid-term goals it set in 2003, when it laid out plans including a pledge to win contracts for thermal energy plants in the U.S., turn its HDD business around, and raise operating profit margin to 5 percent by March 2006.
Last year, Hitachi also promised to turn around all three of its loss-making core businesses — display, flat TVs and HDDs — this year. That deadline has been extended to next year.
Hitachi last month posted a first-half net loss seven times larger than the previous year, on bigger-than-expected drops in hard disk drive prices and cost overruns at its U.S. coal-fired thermal plant.
