Thu, Aug 04, 2011 - Page 10 News List

Hitachi thinks of outsourcing its TV production for profit

BROAD STRATEGYThe company says intense competition and the rising yen is forcing it to take production offshore to protect its earnings

AFP, TOKYO

Japanese high-tech maker Hitachi said yesterday it is considering shifting all television production to foreign outsourcing firms by March next year as part of a broad strategy to increase profitability.

NOT FINAL

Hitachi, whose products range from microchips to nuclear power equipment, has not made a final decision about the plan, a spokesman added.

“The Hitachi brand’s television business will remain. But we are considering ending our only domestic [television] production in Gifu prefecture this fiscal year,” Hitachi spokesman Atsushi Konno said.

Intense price competition has hurt TV earnings at many electronics makers worldwide. For Japanese producers such as Sony and Panasonic, the surging yen has also weighed on sales in foreign markets by making Japan-made products for export more expensive and reducing the value of repatriated earnings.

Hitachi already outsources roughly 80 percent of its television production to foreign producers, Konno said.

‘SHIFTING FOCUS’

“We are in the process of shifting the focus of our digital media operations from a TV-centred model to products such as projectors and components” that will be sold to foreign television manufacturers, he said.

“This is to ensure we secure profit and do not rely on a less profitable area,” he said. Investors welcomed the news. At the Tokyo Stock Exchange, Hitachi trimmed earlier losses and was down one yen or 0.21 percent to 466, off from the intraday low of 456 in morning.

It compared with a 2.03-percent fall in the headline Nikkei index and a 1.89-percent loss of the broader TOPIX.

SPEED

“We’re starting to see a sense of speed in Hitachi’s restructuring efforts,” Naoki Fujiwara, fund manager at Shinkin Asset Management, told Dow Jones Newswires.

“This will accelerate its trend to streamline sluggish operations to focus on strong businesses,” he added.

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