Hitachi Australia will tell you that they are doing well in the flat screen panel market but the reality is that they are bleeding massive losses, $700 million alone forecast for their digital media and consumer electronics divisions in the 2007/2008 financial year ending in April 2008.
In the third quarter to December of last year Hitachi had losses of $450 million. The Company has also admitted that flat TVs would deepen losses this year, as its strategy to focus on 50-inch size plasma TVs backfired and sales of its big TVs made only half of Hitachi's expectations, Chief Financial Officer Toyoaki Nakamura told an analysts' meeting.
With its newest plasma display lines in Miyazaki, western Japan, operating at only 70 percent capacity, Hitachi expects losses in its digital media and consumer segment to balloon to 72 billion yen from a 58.4 billion yen loss last year.
The company, which expects to ship 1.2 million plasma TVs this year against Matsushita's forecast of 5 million units, would start supplying plasma display panels to Chinese TV makers in an effort to ramp up output, Nakamura said.
Late last week a leading Sydney CE retailer and customer installer challenged the quality of Hitachi plasma screens claiming that they were not up to scratch and that despite several attempts to tune them they were unable to get optimum quality.
Another big problem for Hitachi is the failure of their hard drive business where they are battling losses up against Seagate and Mitsubishi which have both posted strong results during the recent reporting period.
Last week Hitachi said that it would withdraw from assembly of home PCs, and sources have told Reuters the group is also seeking a strategic partner to invest in its hard drive business, which has not posted a profit since Hitachi bought it from IBM.
The problem for Hitachi, which two years ago acquired the patents for plasma, is that the market is moving to large screens above 50-inch. For Hitachi to be price competitive in this they either have to outsource production or tip billions into new plants that are capable of producing 72- and 80-inch plasma screens.
