Hitachi Ltd. Reports Massive Earnings Slide; Will Cut 7,000 Jobs
January 30, 2009
TOKYO - Hitachi Ltd. (NYSE: HIT), with operations in semiconductor chips, home appliances, TVs and medical equipment, said it would report a stunning net loss for this fiscal year and that it would cut about 7,000 jobs in its battered auto-equipment and electronics divisions as part of a global restructuring plan.
Hammered by plunging demand in all its operations, the company said it forecast a net loss of 700 billion yen ($7.83 billion), for the fiscal year through March 31, down from the 15 billion yen profit it forecast in October.
Medical Systems Impact Unclear
The Japanese conglomerate told DOTmed News it does not report medical device operations separately. The company's Hitachi Medical Systems America, Inc. (HMSA) is a private subsidiary of Hitachi Medical Corporation (HMC) of Tokyo. HMSA markets HMC's advanced diagnostic medical imaging systems. HMSA has more than 1,500 MRI systems installed throughout the United States and also markets multi-slice computed tomography and digital ultrasound. Also note that HMC trades as a separate company from Hitachi Ltd. on the Tokyo Stock Exchange (as Tokyo 6910). HMC has a market cap of $35.5 billion. The stock is rebounding from an October slump.
Hitachi Ltd's Woes
Commenting on Hitachi Ltd.'s sudden reversal of fortune, chief executive Kazuo Furukawa said at a news conference in Japan today, "Since last November, economic conditions surrounding our company have kept deteriorating at an unprecedented speed.
"Hitachi's automotive components business was battered by slumping car sales worldwide, while its flat-screen TV operations suffered from steep price falls amid fierce competition and anemic demand."
Hitachi's performance was also pummeled by its microchip joint venture, Renesas Technology.
"Economic stagnation is expected to persist for the foreseeable future, making revenue expansion unlikely," Hitachi said in a statement. The company added that it is "determined to implement far-reaching structural reforms" to survive the economic downturn, such as quality improvement measures.
Hitachi also aims to cut 200 billion yen in costs by March 2010 by selling unprofitable businesses and products, reviewing investments, closing plants and cutting workers, the company said.