• The Associated Press


Hitachi will drop money-losing businesses that now bring in 1.6 trillion yen in annual sales for the Japanese electronics maker in an effort to return to profitability.

In announcing the revival plan Thursday, Hitachi President Etsuhiko Shoyama acknowledged the company has not grown globally competitive enough and must decide in the next year or two which operations it must abandon.

He refused to say which operations were being dropped, adding the situation remained “fluid.”

“We want to avoid the same mistakes,” he told reporters. “We have decided to withdraw from unprofitable businesses.”

The Tokyo-based company plans to avoid job cuts, except for workforce reductions through the sale of group companies, Shoyama said, while refusing to give specifics.

Battered by the global electronics slump and cheaper products from Asian rivals, especially computer chips, Hitachi sank into the red, posting a 484 billion yen loss in the fiscal year that ended March 31, 2002. Hitachi will announce earnings for the October-December quarter next week.

In carrying out its latest “future inspiration value” plan, sales in the fiscal year ending in March 2006 will remain at about the current level of 8 trillion yen.

But the company will discard businesses that account for about “20 percent of Hitachi’s net sales” and focus on biomedical, fuel cell, hard disk drive and other businesses that it believes have potential.

The biomedical business, such as DNA diagnosis and cutting-edge cancer treatment, will grow to 400 billion yen in sales by fiscal 2005, up 80 percent from now, according to Hitachi.

Shoyama acknowledged that the company will be forced to spend less on research, especially on chips, which now make up 40 percent of its research spending.

In recent years, Hitachi has been reshaping its operations, withdrawing from cathode ray tube production for personal computer monitors in 2001.

The company has been forming partnerships with former rivals, such as a chip company with Japanese rival NEC Corp. in 1999.

Hitachi and IBM Corp. agreed in 2001 to cooperate in making computer servers and struck an alliance for next-generation storage solutions, a key computer technology, the following year.

Hitachi also set up a plasma display joint venture with Tokyo-based Fujitsu in 1999 and is forming a new company with Mitsubishi Electric to make more sophisticated chips called LSI in April.

Also Thursday, Hitachi said it will adopt a new system of corporate governance to strengthen links among group companies. It is bringing in outside directors, including executives from other companies and a lawyer. The system will require approval at a shareholders’ meeting in June.

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