Hitachi, long the king of Japanese integrated electronics firms, makes everything from washing machines to nuclear power plants, said it expects to post a group net loss of 250 billion yen ($1.83 billion) in the current business year.

Only three months ago it forecast a group net profit of 40billion yen for the year.

The revision is a due to a special loss of 160 billion yen it plans to post during the year to speed up, among other things, restructuring in the faltering semiconductor business.

"Hitachi now faces the biggest crisis since its foundation in 1920," its president Tsutomu Kanai told a news conference.

"We plan to weed out all unprofitable activities in the current business year so we can make a fresh start next year."

Kanai said sales started to fall sharply in May inalmost all of its products amid economic woes.

The information and electronics department was hit particularly hard as sales of personal computers and colour display tubes for PCs, which buoyed growth last year, fell sharply. A protracted fall in computer memory chip prices added to the pressure. The chip business alone will incur a group operating loss of 120 billion yen this business year.

Hitachi is the the world's biggest maker of fast-speed bipolar-based mainframe computers and has built a solid customer base among Japanese financial institutions. But it has struggled to develop other new growth products such as PCs.

In addition, demand for lucrative nuclear and conventional power plants, the core business, representing 35 per cent of total profits, is unlikely to pick up until early next century.

Hitachi expects to post a parent net loss of 260 billion yen during the year, its first loss since going public in 1949.

Among restructuring steps are job cuts of 4,000 at the parent company to66,000, trimming annual fixed spending by 140 billion yen by March 2000, freezing capital spending on new projects and spinning off domestic consumer electronics plants.

Kanai declined to say if Hitachi plans to withdraw entirely from the loss-making businesses, such as dynamic random-access memory (DRAM) chips and consumer electronics. He expects the announced steps to help the group resume a recovery path next business, but analysts remained sceptical.

"It gives an impression that Hitachi is getting more serious in its re-engineering efforts," said Yoshiharu Izumi, an analyst at Warburg Dillon Reed. "But a sharp rebound in the business is unlikely without withdrawals from unprofitable, non-competitive divisions," he said.

Merrill Lynch Japan analyst Kiyohisa Ota said Hitachi, which has a long-held ethos of no personnel cuts, would need to slash 15,000 workers from its payroll if current product lines remained unchanged.

Shares in Hitachi have been in a downward spiral since August, hitting 670 yenon August 27, their lowest level since late 1993. On Thursday the shares ended down 54 yen at 706.

Traders said Hitachi's dismal earnings forecast depressed already weak sentiment in the Tokyo stock market. "Such a huge loss was beyond our expectations. It was a surprise to the market," said a trader at a second-tier securities company.

Traders the "Hitachi shock" made investors uneasy over corporate earnings for the current business year, making likely a further delay in a much hoped-for market recovery.