Hitachi (NYSE: HIT) made a bold move in 2002 when it purchased IBM (NYSE: IBM)'s hard drive business for $2 billion. At the time, the hard drive industry was in a profit funk and IBM was looking to exit the hardware business. It eventually sold its PC division to Chinese company Lenovo to complete its exit from hardware. Five years later, Hitachi probably wishes it had never gotten into hard drives.
Hitachi Global Storage Technologies, the division responsible for hard drive storage, has consistently lost money in the last two years as competitors Seagate Technology (NYSE: STX) and Western Digital (NYSE: WDC) have really taken advantage of home entertainment, laptop and TiVo-like devices that are infiltrating homes like stormtroopers. Sales have been very nice for both companies, which are profitable even after storage was considered a boring and dead field around the year 2000. Hitachi, though, has had no such luck. Instead of selling its hard drive division to a private equity firm, the Japanese conglomerate may be looking to Japanese competitors Toshiba and Fujitsu as partners to form a new hard drive company.
Silver Lake Partners, which helped take Seagate private in 2000 only to launch it as a public company a few years later, has reportedly been in talks with Hitachi. Nothing concrete was produced, and Hitachi even said it does not want to sell the division. If Hitachi is too steeped in Japanese culture to sell to outsiders, then it has to do something -- but its options may remain limited. And, Toshiba and Fujitsu -- both of which have small hard drive businesses -- may not want to take more risk in the storage business currently dominated by Seagate and Western Digital. Hitachi shareholders, hold no fear; most likely, some kind of decision will come before April 1 of this year.
The US government hopes that a large number of nuclear plants will be built in the US over the next 20 years to cut the country's need for oil. But GE (NYSE: GE) CEO Jeffrey Immelt says they will not be built without incentives from the Feds.
According to the FT, "Immelt said only five to 10 US nuclear power projects were likely to go ahead unless there was a carbon-pricing framework to create incentives for utilities to build more." That may be true, but GE should be quiet about championing aid for building those facilities. GE and Hitachi (NYSE: HIT) have a joint venture to build nuclear plants, and the parties would not want to be seen as sell-serving.
The comments raise a difficult issue. The government and utilities both know that the long-term future of cheap oil looks bad. But building nuclear plants take years, is expensive, and requires passing government safety standards. Over the next decade it may actually be cheaper to continue to use fossil fuels even it the price of oil stays high.
GE will make a lot of money on the move to nuclear fuel, but that does not mean that its call for government help is wrong.
Douglas A. McIntyre is an editor at 247wallst.com.
Short interest in General Electric (NYSE: GE) rose 8.2 million shares, to 67.4 million. After all the excitement about future earnings and the stock trading over $40 for the first time in half a decade, the shares have slipped back to just above $38.
What appears to have happened is that the market is concerned that the black box known as GE Finance may have mortgage and high-yield loan problems. But GE is not saying much.
It is hard to find another explanation. NBC Universal should get good money from the upcoming Olympics. The company has won several aviation equipment deals and a large contract with Hitachi to build reactors for Entergy and GE Electric picked up $3.5 billion in building deals in the Middle East.
But GE plays the cards for its financial units very close to the vest. The operations have been money machines for years, but they have already been hit by some sub-prime problems. If the economy gets softer, questions will arise about its credit card portfolio and any high interest loans it may have purchased.
Some part of GE is always worrying investors. For now, it is financial services.
The Financial Times (subscription required) reported that General Motors Corporation's (NYSE: GM) CEO Rick Wagoner expressed caution about the possibility of General Motors adding new brands or US manufacturing plants to its portfolio, remarks that are likely to quash expectations of an imminent GM bid for cross-town rival DaimlerChrysler AG (NYSE: DCX).
According to the Financial Times, Nikko Cordial's largest investor has rejected Citigroup Inc's (NYSE: C) $11B takeover bid.
Also in the Financial Times, 3M Corporation (NYSE: MMM) has filed infringement lawsuits against Sony Corporation (NYSE: SNE) and Lenovo (LNVGY), and others, including Hitachi Ltd ADR (NYSE: HIT), CDW Corporation (NASDAQ: CDWC) and Matsushita Electric Industrial Co Ltd (NYSE: MC).
OTHER PAPERS:
India's Economic Times reported that Wipro Ltd ADS (NYSE: WIT) is said to be close to acquiring an unnamed U.S. aerospace services company for about $90M.
According to the U.K. Times, Procter & Gamble Company (NYSE: PG) has said it is willing to team up with private equity firms to pursue deals.
When it comes to the hard drive industry, there has rarely been an example of more cutthroat competition, price drops, mergers and hard-toothed business practices in a single industry. There were over 70 hard drive companies in the late 70s and 80s -- and now you can count the number of companies on a couple of hands. Good reading on this subject is The Innovator's Dilemma.
With industry leader Seagate Technology (NYSE:STX) buying competitor Maxtor in 2004, there are now just a few companies in this space -- Seagate, Hitachi, Western Digital, Samsung, Toshiba and some smaller players. What the market forgets sometimes is that the Internet, DVRs, iPods, and a myriad of other things could not exist without the hard drive -- it has the cost, speed and flexibility to meet these products' demands.
But hold your applause -- while Seagate CEO Bill Watkins says that traditional hard drive technology may be co-existing with Flash technology (chips, not spinning disks), Sandisk Corp. (NASDAQ:SNDK) has released a flash-based hard drive for use in laptops and other similar devices. Will flash-based storage technology ever be as cheap and flexible as those spinning drives inside the PC you're reading this post on? Who knows -- except maybe Sandisk and memory leaders like Hynix and Samsung. By 2010, we'll probably see if co-existence or replacement of one technology with another happens. Place your bets.
The anti-General Electric Company (NYSE:GE) camp must be quaking in their shoes. The perennial giant is set to comfortably leap above $40 per share...again. There are those of us who have seen this coming for quite some time. If you bought into GE a couple of months ago, this should come as a pleasant entry into the new year.
Several subtle moves by GE have spurred this new and invigorated growth, the most recent of which is the refinancing of Indiana-based Hacienda Restaurants by GE Capital Solutions, Franchise Finance division. The $7.6 million deal allowed Hacienda to buy finance warrants that were still outstanding from investors. This move places 100% control of the restaurant chain directly into the hands of its owners.
General Electric and Hitachi Ltd. (NYSE: HIT) have signed a letter of intent to enter into partnership in the development and resourcing of nuclear energy assets. This is a continuation of GE's push into energy conservation and non-petroleum based energy solutions. The two companies expect to exchange percentage ownership in their respective nuclear energy divisions in order to more efficiently exploit each of their existing nuclear programs. You can get a good look at Hitachi with this link.
A new breed of natural gas fired electric turbine is being installed in Romoland,California by General Electric to produce energy which will be marketed by Calpine Energy Services. This new generation turbine will generate energy to serve the needs of more than half a million homes. General Electric will own the Inland Empire Energy Center facility, while Calpine will manage the facility operations and market the output. The cooperative agreement between GE and Calpine calls for eventual ownership of the facility to be taken over by Calpine Energy Services.
If you're still not sure that GE is leading the pack, I suggest a tour of the General Electric website. It does a nice job of keeping investors up to date. I hope you'll get a feel for just how forward moving and well run a company it is. Watch the stock tickers, see the investors swoon. You just can't write these folks off the page.
Hitachi (NYSE: HIT) made a bold move in 2002 when it purchased IBM (NYSE: IBM)'s hard drive business for $2 billion. At the time, the hard drive industry was in a profit funk and IBM was looking to exit the hardware business. It eventually sold its PC division to Chinese company Lenovo to complete its exit from hardware. Five years later, Hitachi probably wishes it had never gotten into hard drives.
The US government hopes that a large number of nuclear plants will be built in the US over the next 20 years to cut the country's need for oil. But 
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When it comes to the hard drive industry, there has rarely been an example of more cutthroat competition, price drops, mergers and hard-toothed business practices in a single industry. There were over 70 hard drive companies in the late 70s and 80s -- and now you can count the number of companies on a couple of hands. Good reading on this subject is 
The anti-General Electric Company (NYSE:GE) camp must be quaking in their shoes. The perennial giant is set to comfortably leap above $40 per share...again. There are those of us who have seen this coming for quite some time. If you bought into GE a couple of months ago, this should come as a pleasant entry into the new year.
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