Hitachi abandons sales plan

Hitachi, the Japanese electronics conglomerate, has decided to abandon a proposed sale of its US-based hard disk unit after the long-struggling business swung into profit at the end of 2007.

Kazuo Furukawa, chief executive, said in an interview published on Friday in Sankei, the Japanese newspaper, that the unit had become “muscular” and thus the need to sell had “faded”.

Mr Furukawa said he expected it to remain profitable through the coming financial year, which begins tomorrow. The business had been in the red each year since Hitachi bought it from IBM for $2bn in 2002. Hitachi confirmed that the company was no longer considering a sale and that it expected the unit to remain profitable. “Our priority is to keep focusing on running it profitably,” the group said.

Hitachi’s San Jose, California-based hard disk business is the leading supplier of 2.5-in drives, used in laptop computers, and is the world’s third-biggest hard drive maker. It announced a $95m profit in the quarter to December, a turnround from a $93m loss in the same period a year earlier.

Hitachi had considered selling all or part of the business as part of a broad strategic review. It had been in talks with Silver Lake Partners, the technology-focused US private equity fund But those discussions foundered after the unit reported a profit, strengthening the hand of executives who favoured giving the business more time, according to people familiar with the matter.

Japan’s sprawling electronics companies are being forced to shed underperforming businesses to compete with nimbler rivals.

Hitachi, the country’s biggest electronics conglomerate by sales, makes everything from rice cookers to nuclear power plants.

The group said on Wednesday that it would sell its 10 per cent stake in Elpida, the computer memory-chip maker.

Additional reporting by Henny Sender

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