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Japan's Mitsubishi Electric said Monday that it will
stop making mobile telephones because of a bleak outlook for the
loss-making business, which is facing tough competition.
Japan's mobile telephone market
has limited room for further growth as most people already own a
cellphone and the population is shrinking.
"Consequently, Mitsubishi
Electric's mobile handset business has recently suffered shipment
decreases and it has become extremely difficult to expect an
improvement in this field," a company statement said.
Japan, a nation of 127 million
people, has more than 100 million mobile phones in operation,
creating a major challenge for service providers to achieve growth.
Mitsubishi expects its mobile
phone sales in the current fiscal year to March to amount to 2.1
million handsets, worth a total of 100 billion yen (970 million
dollars), mainly for leading Japanese carrier NTT DoCoMo.
Mitsubishi has a relatively small
share of the overall Japanese market which has annual sales of about
50 million handsets.
The company said it was not
planning any layoffs, with roughly 600 workers in the mobile phone
business expected to be relocated to other operations.
The move will cause a temporary
loss of about 17 billion yen in the group's pretax losses in the
current fiscal year to March.
Mitsubishi Electric will shift
resources to areas with brighter prospects, such as communication
infrastructure, home and business security systems, and factory
automation systems.
The move is the latest case of a
Japanese firm realigning its operations, axing or spinning off weak
businesses to focus on areas of strength.
It comes only weeks after rival
Sanyo Electric decided to sell its mobile handset production
operations to rival Kyocera.
Among other recent examples of
restructuring, Toshiba exited high-definition DVD while Hitachi
decided to withdraw from the personal computer business. --AFP
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