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Strategies & Market Trends : The New Economy and its Winners -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (10119)	12/20/2001 3:00:28 PM
From: stockman_scott	Respond to of 57684

After Cutting, Shuffling Units, Hitachi Data Says It's Primed For Growth BY BRIAN DEAGON INVESTOR'S BUSINESS DAILY "Hitachi Data Systems has restructured its business operations on the heels of a 10% work force reduction. The cuts are largely owing to slower-than-expected sales of data storage systems, due to the weak economy and price wars that erode profit. Despite a tough year, Hitachi Data Systems gained market share against EMC Corp. (EMC) in the third quarter. Hitachi's share of the high-end data storage market rose to 32% from 19% in the quarter. EMC's share fell to 44% from 59%. Market research firm International Data Corp. expects Hitachi Data will end the year with sales of $1.67 billion, up 14% from a year ago. Hitachi Data is a wholly owned subsidiary of Hitachi Ltd. (HIT), Japan's largest electronics conglomerate, with annual sales of about $63 billion. Image: High-End Storage In its restructuring, Hitachi Data shook up its marketing group, reduced some nonrevenue-generating businesses and brought aboard a new chief executive. Three general managers left in the process. Shinjoro Iwata succeeded Jun Naruse as president and chief executive of Hitachi Data. Iwata was general manager of the Global Business Development Division. Naruse returns to Japan as executive officer of Hitachi's Information Systems and Telecommunications Group. One thing that didn't change is that David Roberson remains chief operating officer. Analysts consider that a good sign. Roberson has been with Hitachi for 20 years. "Although this degree of management turnover is somewhat disconcerting, in our opinion, David Roberson is and always has been the effective leader of the company," said Shebly Seyrafi, a data storage analyst with A.G. Edwards. "He successfully converted HDS from a mainframe box seller to a global storage leader in little more than a year." Tough Times The reorganization is not that surprising, considering what a tough year it was in the high-end storage market - which includes sales of refrigerator-sized systems packed full of disk drives. A year ago, IDC expected sales in this market would top $27 billion. Last month, it forecast sales of $15.7 billion, an $11 billion drop. The good news is the worst may be over. IDC expects sales next year to grow 3.4% to $16.2 billion, and hit $21.6 billion in 2005. And the price wars that whacked all three leaders in this market - EMC, Hitachi and IBM Corp. (IBM) - appear to be subsiding, analysts say. The restructuring at Hitachi aims at making it more responsive to renewed growth opportunities. "In terms of the reorganization, we simplified the headquarters operation and created a new marketing organization," said Roberson. "The goal is to better understand market trends and get products to market faster." New Group As part of its marketing reorganization, Hitachi pulled about four revenue-generating business units into one group called Global Marketing and Operations. To lead the group, it appointed Marlene Woodworth, a marketing vice president who led the successful launch of two key Hitachi Data products. Meanwhile, Clive James, vice president of Hitachi's OEM business group, retired after 18 years at the company. So did Ron Gervenack, general manager of the enterprise storage products division. Jon LoveJoy left the firm after his nonrevenue-generating information technology group was folded into the general corporate unit. Parent company Hitachi also is considering spending up to $1.25 billion on mergers and acquisitions in the storage area next year. Helping oversee that effort will be Christine Wallis, newly appointed executive vice president and general manager of global marketing and operations. She was a vice president of global storage marketing at Hitachi, and most recently served as vice president of corporate venture capital at Hitachi America. Wallis said part of her mission is to create a technology road map and help determine where Hitachi wants to be a few years out. "Our goal is to be No. 1 in the storage business," she said. Hitachi Data has also expanded its product distribution to four, and possibly five, channels. It sells directly and through resellers, but it also has agreements that allow Hewlett-Packard Co. (HWP) and Sun Microsystems Inc. (SUNW) to resell its high-end storage products. A fifth channel could be added if HP acquires Compaq Computer Corp. (CPQ)." Graphic: investors.com