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Hitachi faces $1.1B loss due to Renesas

Posted: 20 Jan 2009     Print Version  Bookmark and Share

Keywords:microchip  electronics makers  joint venture  hard drives 

Japan's biggest electronics maker, Hitachi Ltd, now faces an annual net loss of more than Rs.5,504.00 crore ($1.1 billion) instead of a previously forecast profit, hurt by a sharp decline in microchip sales.

A growing number of major Japanese electronics makers are expected to suffer big losses for the year ending in March, as the global economy visibly contracts.

A source said this week that Sony Corp. would likely post an annual operating loss of Rs.5,504.00 crore ($1.1 billion), its first such loss in 14 years, while media and analysts say rival Toshiba Corp. is also headed for a big loss.

Hitachi now eyes a net loss of more than Rs.5,504.00 crore (100 billion yen) for the year to March—its third year of losses—due to a large loss at Renesas Technology Corp., a chipmaking joint venture of Hitachi and Mitsubishi Electric Corp, two sources with direct knowledge of the matter said.

Renesas, the world's No.7 maker of semiconductors, is expected to book a net loss of about Rs.9,983.60 crore (200 billion yen), as usage rates halved on equipment used to make chips, said a Renesas source who declined to be named because the numbers are not yet public.

Renesas, which makes chips used in cars, TVs, cameras and hard drives, will also shoulder restructuring costs and a write-down of tax-related assets, reversing an earlier projection for a Rs.474.22 crore (9.5 billion yen) net profit.

A spokesman at Hitachi, which owns 55 per cent of Renesas, declined to comment on the report.

Hitachi, the world's No. 3 maker of hard drives, has already cut its annual net profit forecast to Rs.748.77 crore (15 billion yen) from an initial estimate of Rs.1,996.72 crore (40 billion yen), when it reported half-year results in October.

That compares with an average forecast of a Rs.114.81 crore (2.3 billion yen) net loss in a poll of 11 analysts by Reuters Estimates.

Hitachi, which has been restructuring its hard drive business and gaining profit in its nuclear and thermal power plants, is also suffering from halting orders for automotive equipment and sluggish sales in its flat-panel TVs and other electronics, a Hitachi source said.

Shutoku Watanabe, head of Hitachi's consumer business group, told Reuters this month that the company's annual LCD TV sales would likely be as much as 10 per cent below target as consumers hold off on off big-ticket purchases.

Hitachi had already cut its LCD TV sales forecast for the year to end-March to 850,000 units from 12 lakh.

Shares of Hitachi were trading down 0.6 per cent against the benchmark Nikkei average, which was up 1.5 per cent.

EE Times

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