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To: patron_anejo_por_favor who wrote (154047)	3/1/2002 7:01:51 AM
From: Gut Trader	Respond to of 436258

Tora Tora Tora....Sony, Hitachi Plan Cutbacks in Staffing As Tech Slowdown Spurs Restructuring By PETER LANDERS Staff Reporter of THE WALL STREET JOURNAL TOKYO -- Japan's two biggest electronics companies are taking the ax to their subsidiaries, underlining how the global technology slowdown is forcing major restructuring here. Sony Corp. announced it would take Aiwa Co. private, raising its 61% stake to 100%. Aiwa has already halved its work force to 4,800 and said it will cut at least another 400 employees. It also may shut down its remaining plants in Malaysia and Indonesia, which employ about 3,000 people, although the plants will stay open for now, Aiwa President Masayoshi Morimoto said. Meanwhile, Hitachi Ltd. announced a new round of cuts along with its largest-ever loss. Hitachi said it now expects a net loss of 480 billion yen ($3.57 billion) for the year ending March 31, compared with net profit of 104.3 billion yen in the previous year, as the company took a beating in semiconductors, telecommunications equipment and other areas hit by the bursting of the tech bubble. Analysts and investors had been expecting a revision, but not of this extent. Hitachi said it will reduce the number of its affiliated companies by 300 from around 1,300 and offer an early-retirement program, which it expects will induce 4,000 employees in Japan to leave. Shares of Hitachi, Japan's biggest general electronics manufacturer, rose 3.4% to 852 yen on the Tokyo Stock Exchange. The company made its announcement after the market had closed. Shares of Sony, Japan's No. 1 consumer-electronics maker, fell 3.5% on the news to close at 6,080 yen, while Aiwa rose 1.5% to 550 yen a share before trading was suspended. On top of the global slowdown, Aiwa has been hit by price competition, especially from Chinese makers, in its core audio products, such as boom boxes. "There's been a fundamental change in the environment," said Sony President Kunitake Ando. "Products are rapidly turning into commodities, so it's hard to make a profit" because of the low margins. He said Sony itself, while protected somewhat by its stronger brand, is facing the same problems that drove Aiwa into the ground. Mr. Morimoto, Aiwa's president, said he searched unsuccessfully for an investor or lender who would help the 51-year-old company preserve its operational independence. But only Sony was willing to put up the 20 billion yen to 30 billion yen he estimated was needed to further streamline Aiwa's operations. Without immediate support, he said, Aiwa was about to run out of money. Sony will use its own shares to purchase the 39% of Aiwa it doesn't already own. Aiwa shareholders will receive 0.049 share in Sony for every Aiwa share they own. Sony said it hopes to use the Aiwa brand, which is strong in some developing countries, for products in which Sony doesn't already compete. In general, the two companies' product lines will become complementary. Sony didn't unveil any management shakeup at Aiwa. Hitachi has traditionally allowed its subsidiaries considerable freedom. But in the wake of its huge loss, Hitachi said it wants to integrate or unload poorly performing group companies. It also announced a complete withdrawal from the production of cathode ray tubes for traditional television sets. As a result, Hitachi is laying off 270 workers at a U.S. subsidiary based in Greenville, South Carolina. Write to Peter Landers at peter.landers@wsj.com.