Hitachi boosts stake in plasma panel venture

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Hitachi is increasing its stake in its plasma display panel joint venture with Fujitsu, even as profits have been hit by the sharp downturn in PDP prices.

The Japanese eletronics group said it had agreed to increase its stake in Fujitsu-Hitachi Plasma Display to 80.1 per cent from 50 per cent for an undisclosed sum. Under the deal, Fujitsu will also transfer about 140 PDP patents to Hitachi.

The deal highlights the severe impact that tumbling PDP prices are having on manufacturers and the necessity of having sufficient capital to survive in the fiercely competitive and fast-changing market.

Fujitsu, which was a pioneer of PDP technology and holds many key PDP patents, cannot afford to hold onto a loss-making operation that requires heavy investment. Fujitsu posted a pre-tax loss of Y15.5bn in the third quarter, while FHP is also believed to have made a third-quarter loss.

Kazuhiro Tachibana, vice president of Hitachi, said by increasing its stake the company would be able to more actively pursue an integrated strategy for its panel and TV businesses. ?We are confident that we can turn FHP into the black very quickly,? he sad, although he declined to specify the timetable.

Hitachi, like many Japanese electronics makers, was battered by the sharp fall in PDP prices in the third quarter, which contributed to a 46 per cent drop in operating profits to Y34.3bn on sales up 2 per cent to Y2,123.7bn.

The digital media and consumer electronics division, which includes PDP, posted a quarterly operating loss of Y1.7bn.

Other factors contributing to Hitachi?s weak performance include falling prices of servers, hard disk drives, liquid crystal display panels and white goods.

Hitachi revised its full year operating profit forecast down by 13 per cent to Y260bn, although this would still be an improvement on last year?s Y184.8bn in operating profits. Sales are also forecast to be moderately lower than the previous estimate, at Y8,840bn.

However, Mr Tachibana expressed confidence in the outlook for Hitachi?s PDP business. Since the group also makes HDDs, DVD drives, and other components, the closer ties with FHP will add to these synergies, he said.

FHP has a global market share of about 25 per cent while Hitachi has about 11 per cent of the worldwide TV market, which it aims to raise to about 15 per cent in two years. Plasma TVs comprise just 1 per cent of the world TV market, ?so demand itself will increase substantially,? Mr Tachibana said.

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