Hitachi Ltd., Japan's largest electronics company, announced plans Friday to implement emergency management measures as it slashed sales forecasts for the year and said it expects to post a net loss. The company also said it plans to lay off 14,700 staff before the end of March next year.
The company cut its group net sales forecast by 10.3 percent to 7.85 trillion yen (US$65.7 billion), cut its operating profit forecast from 280 million yen to zero and said it expects to post a net loss of 140 million yen against a previously forecast net profit of 90 million yen, it said in a statement.
Hitachi blamed many of its woes on the semiconductor sector, where prices for commodity memory chips, of which Hitachi is a major supplier, have crashed in the last 12 months. It also lays some blame with its personal computer business, which has been hit hard by a downturn in sales, and said ripples from the rapid slowdown in the U.S. economy are hitting its business around the world.
Company-wide measures included in the emergency plan include the elimination of 14,700 jobs, of which 10,200 will be in Japan and the remaining 4,500 overseas. Many of the job losses will hit the company's semiconductor and display groups, which will be the target of restructuring.
In the semiconductor group, Hitachi plans to suspend some underused domestic production lines, reducing the number of active lines from 19 to 13. These moves, which will result in some layoffs, together with the transfer of workers to subsidiary companies, will reduce Hitachi's domestic semiconductor group staff by 2,000 this year.
Overseas, the company plans to reduce production at Hitachi Nippon Steel Semiconductor Pte. Ltd. in Singapore, its flagship DRAM (dynamic random access memory) production plant. The factory supplies chips to Elpida Memory Inc., the DRAM joint venture between Hitachi and NEC Corp.
In its display business, the company has already announced plans to halt manufacturing of CRTs (cathode ray tubes) for PC monitors. The sale of this business will see 2,000 people leave the company's payroll. Instead, the company will focus its efforts on flat-panel displays, particularly TFT (thin film transistor) LCDs (liquid crystal displays), with plans to expand sales of displays for cellular telephones, handhelds and large-screen monitors.
In other areas, Hitachi said it plans to strengthen its SAN/NAS (storage area network/network attached storage) disk array business, expanding it by almost one-third over the next year. In the digital media business, the company plans to shifting its efforts into new markets, such as network appliances, it said.
The announcement was not unexpected.
Local media began reporting last weekend that the company was on the verge of making such an announcement and Japan's other major electronics manufacturers, NEC Corp., Fujitsu Ltd. and Toshiba Corp., and several smaller companies have already cut their earnings projections and announced corporate-wide restructuring packages.
Nevertheless, it caps a dark week for Japan's electronics companies which, between them, have announced layoffs at home and overseas totaling more than 45,000.
Hitachi Ltd. Revised Group Financial Forecast(all figures in billions of yen) New Forecast Previous Forecast (Apr. 27) Fiscal year 2000 actualNet Sales 7,850 8,750 8,416Operating Income 0 280 342Net Income (loss) (140) 90 104Source: Hitachi Ltd.