Japanese Tech Stock Weekly Summary

The following is excerpted from IRG's weekly stock report:

Hardware

• Hitachi Ltd. (HIT) said it expects a 70 billion yen (US$694.6 million) net loss for its fiscal year ending in March as its TV operations continue to deteriorate. The company has now cut over US$1 billion off its earnings target in just over a month and is on course for a second straight year of losses. The company said the huge losses came from the decision to write down deferred tax assets at its parent company, which it feels can no longer be realized due to the worsening performance of its TV business. Hitachi originally had a net profit target of 40 billion yen (US$396.9 million). The projected loss is mostly due to its flat-panel TV business, despite large one-off special gains due this year from the sale of shares in subsidiaries. The company is caught in a bind familiar to many in the flat-panel TV industry: competition is driving down retail prices and eroding profits, but increasing capacity to cut per-unit costs is expensive. Deep-pocketed rivals such as Matsushita Electric Industrial Co. (MC) and Sharp Corp. (SHCAY.PK) are pouring funds into building new plants, while smaller TV players such as Hitachi and Pioneer Corp. sell off assets and pursue tie-ups. Earlier this month, Pioneer said it would stop manufacturing plasma TV panels.

• Pioneer Corp. said it would swing to a loss this fiscal year as it booked charges to pull out of plasma television-panel manufacturing after failing to convince consumers to pay steep prices for its TVs. Pioneer cut its net outlook for this fiscal year through March to a 15 billion yen (US$147.1 million) loss from the 6 billion yen (US$59.5 million) profit it previously expected. It blamed expenses for the plasma-panel pullout as well as higher taxes for the second downward revision in its profit outlook in just over four months. Instead of manufacturing its own panels, Pioneer said it is now in talks with Matsushita Electric Industrial Co. on securing supplies for its TV sets. Pioneer doesn't sell any other kind of television, but it has a capital tie-up with Sharp Corp., one of the world's largest makers of liquid-crystal display panels. It said it plans to launch a range of LCD TVs supplied by Sharp in Europe this autumn.

Disclaimer: IRG is not responsible for the accuracy of the news compiled within this article, which is based on publicly available information.