TOKYO -- One year after declaring a hefty first-half loss, Hitachi Ltd. is back in the black mainly on the strength of strong sales and improved profit margin in its semiconductor unit.
Although company-wide sales dropped 2% during the six months ended Sept. 30 to $35.54 billion--from $36.42 billion in the first half of 1998--Hitachi managed to eke out a modest $32 million profit, compared with a loss of about $1.3 billion in the comparable year-ago period.
Last year, the semiconductor unit was blamed for a major chunk of the company's loss (see May 27 story).
This year, the situation is completely reversed. Hitachi said its Information Systems and Electronics division posted higher sales as demand for PCs, cellular phones, and thin-film-transistor LCDs rose sharply. The strong performance of the semiconductor business helped to offset the adverse impact of a stronger yen.
With sales slowing in several other business units, including Power and Industrial Systems, Consumer Products, and Materials and Services, Hitachi said it plans to transform itself into a "solutions-providing company" and make the Information Systems and Electronics division the nucleus of this transition. The company did not give details of the reorganization being planned.
"This improvement, achieved despite the severe negative effect of the stronger yen, was due mostly to a marked recovery in semiconductor operation results," the company said in a statement. "In the computer sector, systems integration services did well, but mainframe computers faltered because of intensifying competition and customer concern about the Year 2000 problem."
Hitachi said it expects a 2% decline in fiscal revenue for the period ending March 31, 2000. Net income during the period is expected to be approximately $327 million on estimated revenue of about $72 billion.