Earlier this year Hitachi and IBM reached a definitive agreement under which Hitachi agreed to purchase the majority of IBM's HDD- related assets for $2.05 billion, which includes the transfer of IBM's HDD-related intellectual property portfolio to the new organization. Hitachi will initially own 70 percent of this new company and will make a series of fixed payments to IBM before assuming full ownership after three years. Hitachi and IBM previously received antitrust approval for the proposed transaction from the European Commission, the Japan Fair Trade Commission, Brazil's Conselho Administrativo de Defesa Economica and Taiwan's Fair Trade Commission. The deal still needs approval from Mexican regulators, but IBM expects the deal to close by the end of the year.

Due to low demand, constantly decreasing ASPs (average selling prices), a number of technical problems and the recently introduced new business strategy, IBM decided to sell their HDD division as well as a number of other subsidiaries to third party companies. More information on the IBM-Hitachi deal and the newly formed Hitachi Global Storage Technologies can be found in our original news-story about the matter.

Hitachi plans to make the storage solution provider profitable during the next fiscal year (ending April 2004), I believe, this requires extensive restructuring that first of all includes massive lay-offs and maybe outsourcing some of the activities.