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Hitachi Data Systems

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About Hitachi Data Systems

Hitachi, which means "risen sun," is looking for a new dawn of profits from its galaxy of businesses. The company's Information & Telecommunications Systems (semiconductors, servers, mainframes, ATMs) brings in the most revenue, followed by Social Infrastructure (elevators, escalators, industrial machinery) and High Functional Materials (wire, cables, – more... specialty steel, circuit boards). Its Electronic Systems & Equipment segment includes specialized manufacturing equipment and power tools. The company is a world leader in consumer goods ranging from TVs to washing machines and in power generation equipment. Hitachi also has operations in financial services, automotive systems, and construction machinery. 

Operations

Responding to such IT changes as cloud computing and business globalization, the company announced it would merge Information & Telecommunication Systems' units Hitachi Electronics Services (HES) and Hitachi Information Systems (Hitachi Joho) to create Hitachi Systems. Effective in 2011, the combination is designed to strengthen the company's data center services business in Japan. The move follows Hitachi's efforts to focus on its most profitable segments and streamline sector management.

Financial Analysis

When the company announced fiscal 2011 results, it showed improved revenue on the strength of an increase in global demand amid economic recovery and the company's restructuring and cost-cutting measures. Revenue had declined 10% the prior year due to falling demand, though belt tightening in 2009 had begun to have a positive effect on net income. 

Strategy

Hitachi plans to put many of its eggs in the Social Innovation basket, where its Social Infrastructure unit works with its other four leading business units -- Information & Telecom, Power, Construction Machinery, and High Functional Materials -- to create IT, power, and transportation systems for urban and industrial segments. The eggs in the basket are about ¥2.6 trillion in capital expenditures, strategic investments, and R&D spending on Social Innovation through fiscal 2014. Other targets include improving Hitachi's overall business structure and expanding globally, especially in China, Germany, and the US.

In a move aimed at improving its ability to compete in an increasingly global marketplace, in early 2011 Hitachi formed an alliance with Mitsubishi Heavy Industries (MHI) and Mitsubishi Electric Corp to spin off and integrate their hydroelectric power businesses. The joint venture, 98% owned by Hitachi with 1% for each of the other partners, is tentatively named HM Hydro. The companies' variable-speed technology could give them an advantage over other power players if smart grids continue to expand in global markets. The joint venture is a way for Hitachi and its partners to better compete for international projects against market leaders such as Toshiba and Voith Hydro (a joint venture between Voith and Siemens). The domestic market for hydroelectric power systems in Japan has stopped growing, which has forced companies there to rely on maintenance services to stay afloat.

An increasingly competitive climate along with expected growth in the small and midsized display market prompted another alliance, in this case with Sony and Toshiba. Each of the three companies will integrate their businesses in this niche under a new company to be set up and run by Innovation Network Corporation of Japan (INCJ). INCJ will hold 70% of the voting stock in the company, while the remaining shares will be evenly divided among the other three companies.

As part of its strategy to refocus on its infrastructure businesses, in 2012 Hitachi sold its Hitachi Global Storage Technologies (HGST) disk drive subsidiary to Western Digital in a $4.3 billion cash and stock transaction. The deal gave Hitachi a 10% stake in Western Digital and board representation, along with an estimated $3.5 billion in cash. Hitachi originally planned on an IPO for HGST, which became profitable in 2011 after five years of losses. HGST was not considered core to ongoing operations. Also in 2012 Hitachi's display business was folded into a new joint venture with Sony and Toshiba, called Japan Display Inc. The company was launched on the same day as South Korea-based rival Samsung Display Co., Ltd. and focuses on small and midsized displays for mobile devices, automotive, and industrial applications.

Mergers and Acquisitions

In 2012 Hitachi announced it would buy the UK Horizon nuclear project from Germany's E.ON and RWE for $1.12 billion to build four to six new nuclear power stations. It hopes to have the first of the 1,300 megawatt (MW) nuclear power plants operations by the mid-2020s. Together, the plants could provide electricity to 14 million homes for more than 60 years. Hitachi, along with British companies Babcock International and Rolls-Royce, will use Horizon to create a strong and permanent base of nuclear skills in the UK. – less

Hitachi Data Systems Employer Reviews

Responsable Canadien, Channel Marketing (Former Employee), Montreal, qcJanuary 11, 2013
Sr. Strategic Alliance Operations Analyst (Current Employee), Santa Clara, CAFebruary 17, 2014
SAP Enterprise Architect for Hitachi Solutions (Former Employee), ChicagoFebruary 7, 2014
Customer Service (Former Employee), London, ENGJanuary 17, 2014
Executive Assistant (Former Employee), Santa Clara, CANovember 2, 2013

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