Hitachi hard drive losses fuel sale rumours

Predictions that Hitachi will lose more than $286m at its hard disk subsidiary in the current year have strengthened speculation that the unit could be sold off.

Hitachi has denied reports that it has already decided to sell the hard drive business.

Fiscal year operating losses at Hitachi Global Storage Technologies could be worse than the company's own prediction of $286.3m, Japan's leading business daily, Nikkei, reported over the weekend.

"Hitachi is focusing on improving the performance of the hard disk drive business and is exploring every possibility, but it has not decided to sell the business," the company announced in a statement to the press on Friday.

Hitachi shares rose strongly in Japan on news of the potential sale late last week.

In response to speculation that US investment funds were among the potential buyers, a Hitachi spokesperson told Nikkei Business Press: "We don't say we have never been asked to sell the business by capital funds or others, but it is not true that we have confirmed our policy to sell it."

Despite being at the forefront of hard disk technology, the unit has persistently posted hefty losses since Hitachi paid more than $2bn to buy it from IBM in 2002.

After the successful sale of the hard disk drive business, IBM went on to sell its loss-making consumer PC business in 2004 to China's Lenovo which has also struggled to turn a profit from the acquisition.

However, Lenovo is still sometimes named by analysts as a potential purchaser of other former IBM units, which include printer maker Lexmark, as well as Hitachi Global Storage Technologies.