Hitachi mulls comeback for struggling hard-disk unit

The Tokyo-based company, which holds a little less than 20 percent of the global HDD market, trails industry leaders Seagate Technology and Western Digital, which have been profitable despite aggressive notebook computer pricing.

Hitachi has promised its hard drives would be profitable this year, and has said it would close an HDD parts factory in Mexico and cut 4,500 jobs by the end of 2008.

SHARPER FOCUS

Hitachi, a sprawling conglomerate whose products range from nuclear turbines to washing machines, has vowed to sharpen its focus to ensure long-term profit growth in the wake of a 33 billion yen group net loss in the past business year.

Its announcement in March that it would sell its stake in Japan Servo Co. to precision motor maker Nidec Corp. had fuelled speculation among investors that it might do the same with other struggling units.

But Hitachi had said just a few months ago that it had no plans to withdraw from hard drives or from flat TVs, which have also been losing money due to tough price competition.

"We are not raising a flag of surrender," Toyoaki Nakamura, Hitachi's chief financial officer, told a news conference in May.

"We haven't given up on returning these businesses to profitability. We are not considering withdrawing from these businesses," he said.

Talk of a possible deal involving Hitachi's hard drive business come as consolidation within the industry gathers pace.

Japanese electronics parts maker TDK Corp agreed earlier this year to take over rival Alps Electric Co.'s business in hard drive heads, which are used to read and write data on the disks.