Hitachi pulls out of home PCs

TOKYO (Reuters) - Hitachi Ltd 6501.T said on Tuesday it is withdrawing from the home personal-computer business amid sluggish sales, the latest move by a Japanese electronics group to trim struggling operations.

Hitachi, which helped pioneer PC technology in Japan three decades ago, has not developed new Prius-brand PCs for the year-end shopping season and will stop making them, Hitachi spokesman Keisaku Shibatani said.

“We want to develop new computers for use in the broadcasting industry, which is becoming more digitized,” he said, without giving further details.

The conglomerate, whose products range from nuclear reactors to washing machines, is pulling out of underperforming businesses to pool resources to fight price falls and mounting development costs.

Hitachi ranked eighth in Japan's PC market with only 4.5 percent share, shipping 580,000 units in the year ended March, and trailing the likes of NEC Corp 6701.T, Fujitsu Ltd 6702.T, Dell Inc DELL.O and Toshiba Corp 6104.T, according to MM Research Institute.

The firm, which has pledged to focus on growth areas, sold its stake in Japan Servo Co 6585.T to precision motor maker Nidec Corp 6594.OS in April. It is also looking to sell a stake in its loss-making hard disk drive arm to a strategic investor, sources have told Reuters.

Rival Toshiba has focused on its microchips and nuclear power businesses, ramping up its NAND flash memory chip production lines and leveraging its U.S. unit Westinghouse’s brand to win nuclear orders abroad.

Hitachi will scale back PC production at its factory in Toyokawa, central Japan, to server-based computers for businesses. Hitachi contracted out production of its other PCs to Hewlett-Packard Co HPQ.N earlier this year.

Japanese PC makers, which include supercomputer makers like Hitachi and NEC, have been dwarfed in the global PC market by Dell, Hewlett-Packard Co HPQ.N and Lenovo Group 0992.HK.

“Japanese electronics firms fight for domestic market share while missing more lucrative growth overseas,” said Yoshihisa Toyosaki, president of Tokyo-based IT consulting firm J-Star Global. “They’ve realized at long last that they can’t afford to keep doing that.”

Sony Corp 6758.T plans to sell its PlayStation 3 microchip production lines to Toshiba as it cuts growing chip production costs. Sanyo Electric Co Ltd 6764.T is also seeking to shed struggling units and concentrate on profitable ones such as its batteries business.

Shares of Hitachi rose 0.8 percent to 740 yen, compared with a 0.51 percent rise in the benchmark Nikkei average .N225.

Additional reporting by Eriko Amaha