UPDATE 3-Hitachi profit jumps, TV repair darkens outlook
(Recasts with net profit, adds comments)
TOKYO, Feb 5 (Reuters) - Japan's Hitachi Ltd (6501.T), whose products range from washing machines to nuclear reactors, posted a tenfold surge in quarterly profit on hard drives, elevators and excavators, but the cost of fixing its struggling TV business saw it slash its outlook.
Hitachi, a sprawling electronics group whose 911 subsidiaries are split into booming infrastructure-related operations and slumping electronics, cut its annual outlook by 75 percent to a net profit of 10 billion yen.
That was sharply lower than the average analyst forecast for a net profit of 45 billion yen, Reuters estimates showed.
The downward revision underlines the costs still ahead as Hitachi, the world's No. 3 maker of disk drives, streamlines its operations and focuses on turning its cutting-edge research into profits.
Hitachi said its digital media and consumer products segment would post a loss of 98 billion yen in the year to March, deepening from an October forecast for a loss of 72 billion yen, as it staff, inventory and other turnaround costs build at its flat TV business.
Add in restructuring costs for projection TVs and DVDs and the bill will hit 30 billion yen this year, executives said, but analysts said there was more fat to be cut.
"It's clear which Hitachi businesses are doing well and which are not," said Yoshihisa Okamoto, senior vice president at Fuji Investment Management. "Hitachi really needs to think of a way to turn around its flat TVs."
Hitachi, which competes in flat TV markets controlled by bigger rivals Sony Corp (6758.T), Samsung Electronics Co Ltd (005930.KS) and Matsushita Electric Industrial Co (6752.T), lowered its target to shipping 900,000 plasma TVs, down from 1.2 million, even as falling prices further hit revenues.
"Our 50-inch class big TVs are not selling in North America," Senior Vice President Toyoaki Nakamura told a news conference.
As part of a widespread slimming exercise, Hitachi is selling half its LCD panel-making unit, Hitachi Displays, to Canon Inc (7751.T) and Matsushita.
BETTER HARD DRIVES
Hitachi, whose laboratories conduct research ranging from chips to fuel cells to nanotechnology, posted a net profit of 12.5 billion yen in October-December, up from 1.3 billion yen a year ago, as its hard drives business swung to its first quarterly profit in two years.
The world's No. 3 maker of hard disk drives posted a $95 million quarterly profit, up from a $93 million loss a year earlier, helped by booming demand for PC storage that has also nearly tripled profit at market leaders Seagate Technology STX.N and Western Digital Corp (WDC.N).
But that business climate was unlikely to last, Okamoto said, as hard disks gradually lose ground to flash memory.
Hitachi's hard drive unit has not posted an annual profit since it was bought from IBM (IBM.N) in 2002.
Operating profit at Hitachi, which began in 1910 as a repair factory for mining equipment, rose to a better-than-expected 77.9 billion yen in October-December, up from 61.56 billion yen a year earlier, on a 9 percent rise in sales.
Prior to the announcement, shares of Hitachi ended the day up 0.9 percent at 819 yen, against the benchmark Nikkei average's .N225 0.8 percent fall.
In October-December, shares of Hitachi rose 8.9 percent, outperforming the electrical machinery subindex's .IELEC.T 7 percent fall, on hopes of further restructuring. (Additional reporting by Yoko Kubota; Editing by Rodney Joyce)
