Hitachi Merges US Units, Lowers Earnings

Hitachi Ltd. today lowered its earnings forecast for the current fiscal year and said it will combine two computer subsidiaries in the U.S. into one company.

The Tokyo-based computer vendor said for the year ending March 31, 1999 it will suffer a consolidated pretax loss of 290 billion [B] yen (US$2.6 billion). The company had previously estimated a loss of 230 billion [B] yen for the year. Its forecasted revenues for the year, 7.87 trillion [T] yen, remain unchanged.

Hitachi will also begin immediately to merge its Milpitas, California-based PC company, Hitachi PC Corp. into Hitachi Data Systems Corp. (HDS), a seller of servers and storage systems based in Santa Clara, California. The combined company will use HDS name.

The merger will produce some staff cuts, according to Emi Takase, a spokeswoman at Hitachi's Tokyo headquarters. She did not know how many people would be laid off. Currently Hitachi PC has 90 staffers while HDS employs 2300 people. Hitachi has not decided if it will close down the Hitachi PC office, she said.

The reorganization is part of an Hitachi realignment -- and an industry trend -- toward providing corporate customers full "solutions," or integrated combinations of computer hardware, software, networks and services. This differs from the company's past business strategy which leaned more on sales of individual products.

Hitachi PC, initially a seller of notebook PCs, over the past year has rolled out a family of PC servers for the U.S. market, a key piece of its new, broader focus. Last month the company announced a midrange 4-way machine based on Intel Corp.'s Pentium II Xeon processor.

"Hitachi PC has been trying to shift from the more consumer target for mobile notebooks to corporate PC servers," Takase said. The announcement today "is part of that shift ... we need full line of computer products to provide a full line of solutions for customers."

In preparation for today's merger, Hitachi last month bought Electronic Data Systems Corp.'s stake in HDS [See " Hitachi to Buy EDS Stake in Hitachi Data,s" Jan. 29.]

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