Hitachi mulls applying for gov't financial aid program: Pres. Kawamura

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TOKYO, April 20 Kyodo -
Hitachi Ltd.'s newly appointed president, Takashi Kawamura, said Monday the
company is considering applying for a state-sponsored revitalization program as
one of its options to restore its financial health, which has been battered by
the global economic crisis.
Hitachi is not alone in setting sights on public assistance with many other
Japanese high-tech companies like Elpida Memory Inc. and Toshiba Corp. all
scrambling to boost their thinning capital base.
''We're mulling the (government) measure for a number of our divisions, but
what form it will take is still under consideration,'' Kawamura said at his
first press conference as company president in Tokyo.
The electronics conglomerate, which makes flat-panel televisions and hard-disk
drives among other products, expects to log its worst-ever group net loss of
700 billion yen for fiscal 2008, having been hit by a stronger yen and a severe
slump in its semiconductor division.
''Our basic stance is to strengthen our capital base by improving our net
profit, but...there may be cases where we'll need additional funding,''
Kawamura said.
The 69-year-old veteran Kawamura, who took the helm of the company earlier this
month, hinted that Hitachi may remain in the red for the year ahead amid sour
market conditions for its electronics and auto-related operations.
''From every perspective including market conditions, fiscal 2009 is going to
be tough,'' Kawamura said, adding that recovery is likely to take place from
the business year starting next April.
Kawamura also said Hitachi will focus more on the profitable social
infrastructure businesses including nuclear power reactors and railway cars,
which may mark a departure from its status as Japan's electronics giant.
''We're going to focus more on the social innovation business and slightly
shift our axis away from our course as a general electronics conglomerate to
build a structure for stable profits,'' he said.
He added the company will pursue tie-ups with local partners and aim to expand
overseas revenues through its focus on power plant and transportation system
operations.
Other Japanese firms like struggling Elpida have also said they intend to apply
for the capital-boosting program, legislation for which is still being
deliberated in the Diet.
Under the plan, the government-backed Japan Finance Corp. will compensate up to
80 percent of any losses incurred by the Development Bank of Japan or
commercial banks after providing loans or investing in cash-strapped companies
outside the financial sector.
Like Toshiba, one cause behind Hitachi's financial woes stems from Renesas
Technology Corp., its chipmaking venture with Mitsubishi Electric Corp., which
is now mulling an integration with NEC Electronics Corp. to ride out the
industry slump.
Toshiba, the world's No. 2 maker of NAND flash memory used in cellphones and
digital music players, is also likely to boost its capital by about 500 billion
yen amid plummeting demand and an erosion of chip prices.
Kawamura, previously the vice president and chairman of Hitachi Maxell Ltd.,
replaced former President Kazuo Furukawa.
The company has said it will spin off its struggling auto parts and television
operations into separate companies on July 1. Kawamura said he will outline the
new structure of the Hitachi group during the current business year ending next
March.
''If we're now facing a once-in-a-century crisis, it's my role to outline a
direction to emerge from the bottom and move forward,'' Kawamura said.
==Kyodo
2009-04-20 20:58:32