Hitachi Ltd. is showing Sony Corp. and Panasonic Corp. that there can be life after TV.

The company ended 56 years of TV manufacturing in August as part of a turnaround from a record loss three years ago. President Hiroaki Nakanishi, a 42-year company veteran, has also shed units making liquid-crystal displays and hard drives while seeking annual cost cuts of some ¥450 billion.

Outsourcing TV production let Hitachi escape rising South Korean competition and slumping prices that have hit Panasonic, Sony and Sharp Corp. with growing losses. Instead, the 102-year-old manufacturer is benefiting from demand for power stations in India, high-speed trains in Europe and auto parts in China.

“Hitachi’s decision came just in time,” said Masayuki Kubota of Daiwa SB Investments Ltd. “Japan has lost its competitive edge in consumer electronics.”

Sharp, Sony and Panasonic have each slumped more than 73 percent in Tokyo trading since April 2010, when Nakanishi took over at Hitachi. His company has risen 17 percent, boosting its market value to $24 billion (¥1.9 trillion) — almost as much as the three consumer electronics makers combined.

Hitachi’s array of industrial products such as construction equipment, software and escalators has made it easier for it to shed TV operations than it would be for rivals. Its consumer products division accounted for 8.3 percent of sales in the quarter that ended in September, down from 12 percent four years earlier. Sony, Sharp and Panasonic get more than two-thirds of sales from electronics, giving them fewer alternatives for boosting revenue.

“It would be particularly difficult for Panasonic and Sharp to stop making televisions,” said Ichiro Michikoshi, an analyst at BCN Inc.

Nonetheless, Hitachi should be an example for other companies in the country as they consider what to do about loss-making operations, said Atsushi Osanai, a Sony veteran now working as an associate professor at Waseda University’s business school.

“Many Japanese companies tend to hold onto businesses even if they aren’t profitable,” he said. “They could learn a lot from Hitachi.”

Hitachi’s investment areas include cloud computing and smart cities, and it’s aiming to cut costs 5 percent through greater cooperation among its 900 or so units in purchasing, production and back-office functions. The company is also emphasizing emerging markets to reduce its reliance on Japan’s shrinking population. It will highlight the push by holding a board meeting in India next month, its first outside Japan. About 60 percent of sales now come from Japan.

Hitachi began its shift away from consumer-electronics in 2007, when it stopped making personal computers. It later shed two LCD-making units, a stake in chip-maker Elpida Memory Inc. and a hard-disk drive business.

The sale of the drive unit, which Nakanishi had headed and turned around following losses, was valued at $4.8 billion. That helped the company post a record net income of ¥347 billion in the year that ended in March. Three years earlier, it lost ¥787 billion, partly because of tax writeoffs.

“The biggest loss in our history was a big driver of change,” said Atsushi Konno, a spokesman. “No one asked why we were selling the hard-disk drive unit after that.”

In TV-making, the company closed its overseas factories and then in August shuttered its last plant, in Japan. While it still sells Hitachi-branded TVs, Konno said, “we don’t need to make them ourselves.”

The company should consider halting TV sales altogether as there is still a possibility of losing money in the business, even if outsourcing has reduced the risk, said Takeo Miyamoto, an analyst with Deutsche Bank AG in Tokyo.

Japanese TV-makers have been caught between falling demand and competition from Samsung Electronics Co. and LG Corp. As global TV shipments have declined more than 4 percent this year and are expected to remain little changed in 2013, Japan’s deliveries plunged 77 percent in the second quarter, according to researcher DisplaySearch.

The slump has left Sony, Japan’s biggest television maker, forecasting a ninth straight annual loss at its TV unit. No. 2 Panasonic is expecting a net loss of ¥765 billion this fiscal year. It has skipped a dividend for the first time since 1950 because of an “urgent need” to improve its financial position. Sharp has increased its full-year loss forecast and drawn up plans to close plants and shed staff.

Hitachi expects to increase its operating profit 16 percent this year to ¥480 billion. Net income will probably fall 42 percent to ¥200 billion, after a boost a year earlier from the sale of the hard drive unit to Western Digital Corp. Sales will total ¥9 trillion.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.