Hitach Hits Hard Times

What do you call a company that has more than 900 subsidiaries? You might call it “enormous”, but you could also call it Hitachi, one of Japan’s largest conglomerate corporations. And the global recession has hit the company just about as hard as many of its competitors around the world. This week, Hitachi announced new top management and restructuring plans intended to help put its balance sheet back in the black as quickly as possible. The 1/900th that concerns us the most is that the consumer electronics portion of the business is going to be spun off as a separate company starting in July.

Hitachi has already decided to stop producing its own plasma panels for its HDTV products, and to buy them from Panasonic instead. This is an attempt to reduce the risks that go along with running a flat panel manufacturing operation.

The bottom line here is that even a company as big as Hitachi is feeling the squeeze of consolidation in the flat panel manufacturing and marketing businesses. Hitachi has never been a significant player in U.S. consumer television sales; it’s slogan of “Inspire the Next” does not seem to grab U.S. consumers, and its products have fallen in that dangerous middle ground between premium-priced features and cost-competitive entry level brands. And their strange 1024 by 1080 pixel plasma format — which they called “HD1080” even though it only has about half the pixels required for 1080p — failed to find a sizable market.

It is quite likely that this creation of a separate company for the flat TV business is simply an exercise in rearranging deck chairs. I don’t expect Hitachi to remain in the TV business over the long haul.