March 31, 1999

FOR IMMEDIATE RELEASE
Media Contacts:
Pat Boyd PR Dept.
Mitsubishi Electric Corporation
Tel: 03-3218-2346
e-mail: boydjp@gog.hon.melco.co.jp

MITSUBISHI ELECTRIC ANNOUNCES MID-TERM CORPORATE STRATEGY

TOKYO, March 31, 1999-- Mitsubishi Electric Corporation today announced a mid-term corporate strategy designed to improve the company's profitability and expand sales over the next three years (through March 31, 2002).

In October of last year, Mitsubishi Electric initiated a plan to reform its management, operational structure and corporate practices over the short term. This plan is currently being implemented and has already resulted in the near completion of the successful restructuring of overseas operations. Mitsubishi Electric is now proceeding with efforts to improve the performance of the entire company group by promoting corporate and business unit strategies with a set of targets for the fiscal year ending in March 2002, the eightieth anniversary of the company's founding.

Overview and Targets

Mitsubishi Electric intends to hasten reforms of its management structure in order to reinforce a responsible managerial system capable of speedy decision-making. Specific reforms will include:

1. The further promotion of responsible management and the strengthening of the company's system of independent business units (which was first introduced on a company-wide basis in 1977 and later strengthened in 1993)
2. The amendment of the company's charter to reduce the number of board of directors members from 33 to 24 (as of June 1999)
3. The leveraging of synergies between technology and management resources
4. The spinning off of individual operations in order to strengthen business and improve efficiency
5. The reinforcement of corporate staff involved in strategic activities and the spinning off of staff operations performing corporate services in an effort to improve efficiency while strengthening the managerial foundation of the entire group
6. The establishment in April 1999 of three new management-related initiatives: The "Management Meeting," which will serve as the company's top decision-making body; the "Strategic Management Meeting," which will provide a place for debate and examination of corporate strategy issues; and the "Global Advisory Committee," a new group composed of outside advisors reporting directly to the president

Acting on the presupposition that difficult market conditions will persist, Mitsubishi Electric will promote operational reforms emphasizing profitability as follows:

1. A clear differentiation will be made between business sectors to be expanded and those to be scaled down and/or eliminated. Among the sectors to be expanded, the company will aggressively pursue strategic alliances and joint business agreements with partner companies as well as the outright spinning off of operations.
2. Operations that are consistently running at a loss will be aggressively evaluated during the upcoming fiscal year, and those deemed difficult or impossible to return to profitability will be spun off, sold or shut down by March 2001.
3. The restructuring of overseas operations is nearly complete as of this writing.

Mitsubishi Electric has set the following targets for its consolidated operations to be achieved by the fiscal year ending in March 2002:

Consolidated Sales:	4 trillion yen (3.7 trillion yen forecast for current fiscal year)
Income Before Income Taxes:	more than 120 billion yen (or 3% of consolidated sales)
ROE:	more than 10%
Employees:	14,500 reduction as compared with current employment levels, including 8,400 in Japan (of which 6,000 will come from the parent company) and 6,100 in overseas operations

Note: Net year-on-year employee reductions in the current fiscal year amounted to 2,600 on a consolidated basis, of which 1,000 occurred at the parent company.

Strategy for Individual Operations

Mitsubishi Electric will continue to promote the "selection and consolidation" of its operations by emphasizing the strategic importance and profitability of individual product sectors. The following chart summarizes how management plans to increase the percentage of sales coming from strategic sectors over the next three years:

(% of Consolidated Sales)

Period	Sectors Targeted for Expansion	Sectors Targeted for Reduction	Sectors Targeted for Improved Profitability
Fiscal year ending March 31, 1999	43%	21%	36%
Fiscal year ending March 31, 2002	58%	7%	35%

Mitsubishi Electric will dedicate itself to expanding operations related to next -generation communications infrastructure and digital information technology devices, two product groups that will form the foundation of the open digital networks of the coming century. Accordingly, the firm plans to concentrate and redirect resources towards its CCV solutions business¹, an integration of Mitsubishi Electric's expertise in technologies ranging from high-quality image processing and Internet/intranet security to high-speed, mass communications systems, satellite communications, and wireless communications. In addition, Mitsubishi Electric will actively pursue alliances in this sector with capable partner companies. Specifically, the company will target the following:

1. To become the top vender of next-generation communications infrastructure technology, ranging from satellite communications systems to undersea fiber optic cables
2. To become the world's top manufacturer of satellites and on-board satellite equipment: Mitsubishi Electric aims to establish itself in international markets as a prime contractor and full service (including launch operations) satellite company. Further, the company intends to preserve its top position in the Japanese satellite market and grow its satellite operations into a core business.
3. To strengthen the foundation of personal digital assistant operations: Leveraging its expertise in cellular telephones, Mitsubishi Electric will develop and market original personal digital assistant devices to meet the demands of the networking era.
4. To expand operations in microwave and optoelectronics: Mitsubishi Electric will establish top market share in the fields of optical modules, optoelectronics and microwave devices.

Mitsubishi Electric's semiconductor group, concentrating on expanding System LSI (Large Scale Integration) integrated circuits operations, will return to profitability by the fiscal year ending in March 2001. Reforms in these operations will shift the focus from standard-use memory products to System LSI fields driven by IP (intellectual property) portfolios. In addition, Mitsubishi Electric's core competency in microcontrollers and advanced eRAM products will be prioritized, with an additional 500 designers to be added to these two product groups. Operations related to high frequency and optical semiconductors, as well as power devices, will also be strengthened.

The mid-term corporate strategy calls for improvements in market share and profitability among the firm's core businesses. Mitsubishi Electric's core businesses include some of the top players in the fields of energy systems, public systems, building systems, home electronics, factory automation, and automotive electronics. These product groups will be expanded and made more profitable through measures including the promotion of strategic alliances with partner companies, spin-offs, efficiency improvements and further dedication of resources.

The company will also restructure its operations targeted for growth in global markets. Specifically, implementing measures that may include strategic alliances and joint ventures with other companies, Mitsubishi Electric will aim to become one of the top three in global market share in the following product groups: cellular phones, satellite communications, energy systems, elevators and escalators, air conditioning, automotive electronics, and factory automation.

The implementation of measures to restructure product groups that have generated losses consistently over recent years will be completed by the fiscal year ending in March 2001. The long-term viability and profit potential of individual loss-making operations within each of the company's business divisions will be assessed and measures including spin-offs, sales and shut downs will be implemented during the course of the new fiscal year. These restructuring measures will be completed at the latest by March 2001. Including the already completed restructuring of US operations (closing of a semiconductor factory, withdrawal from the analog direct-view television market, outsourcing of cellular telephone production, etc.) and the measures currently being implemented in Europe (cessation of television and personal computer production in the UK and semiconductor assembly and test operations in Germany) and Asia, restructuring in international operations is nearly completed as of the end of this current fiscal year.

Corporate Strategies

Mitsubishi Electric Corporation, the parent company of the Mitsubishi Electric Group, plans to implement a reform of its short term cost structure. Over the next two years (by March 2001), in order to build a profit structure that is not dependent on volume increases, fixed costs will be cut by more than 100 billion yen while variable costs will be reduced by 50 billion yen (a 2-point reduction in variable cost percentage). In addition, in the April 1999-March 2000 fiscal year, capital investment will be cut by approximately 20%, while efficiency improvements will lower research and development expenditures by 10%. Further, following reductions in the fiscal year ending today, other expenses will be cut by an additional 10%. Finally, the parent company plans to institute a large reduction in new hiring for the fiscal year ending in March 2001.

Mitsubishi Electric will also introduce measures to improve the competitiveness of the corporate group and promote the strengthening of the management base of all the group's companies. These will include efforts to improve efficiency and cooperation in staff functions such as group finance, central oversight of currency exchange, centralized material procurement, employee benefits, information systems, and supply management. In order to improve further the corporate group's efficiency and operational strength, a policy of "selection and consolidation" will be implemented to restructure, disband and/or combine group companies, reducing the number of domestic group companies from 180 to 140. In particular, these measures will cover fields such as information systems and networks, supply management, distribution, and software engineering. In addition, group companies outside the scope of Mitsubishi Electric's main operations or with poor revenues and little expectation of improvement will be swiftly dealt with through sales to third parties and other measures. Mitsubishi Electric will also support the efforts of group companies to grow their own businesses (and thus increase the ratio of consolidated to non-consolidated sales).

Corporate finance strategy will focus on reducing the consolidated total debt ratio, currently forecast to come to 40% for this fiscal year, to under 35% by the end of March 2002. This will be accomplished by the following:

1. Initial public offerings from around ten affiliated companies
2. Further securitization of trade receivables
3. The establishment of a global cash management system
4. Improvements in asset management efficiency

Another series of reforms will be aimed at qualitatively and quantitatively improving the sales operations of the Mitsubishi Electric group both at home and abroad. In particular, through efficiency increases and improved utilization of technical personnel, approximately 1000 employees will be shifted to sales operations over the next three years. As a consequence of these measures, sales forces involved in direct sales to customers will be increased by 30% and sales groups in affiliated representative and sales companies will be reinforced by the temporary appointment or permanent transfer of over 700 staff. Senior engineers at production and research facilities will also be shifted to perform sales and system engineer functions. Systems engineering groups working directly under sales groups will also be strengthened. In addition, the company's mass sales network, including its sales representative operation, will be reinforced and made more efficient. In both domestic and international operations, regional sales systems will be further equipped to meet the needs of their individual markets.

Mitsubishi Electric is conducting a radical review of its polices regarding future human resource mobility, proper hiring practices, and other human resources-related systems. This review will aim to accomplish the following:

1. To increase the organization's ability to support shifts of staff between business groups, occupational changes, and arrangement of alternative employment
2. To ready measures to increase year-round hiring and to diversify the types of employment contracts to be used
3. To consider future polices regarding reform of the employee pension system and a shift to a pay structure linked to business performance
4. To outsource employee training and employee benefit-related functions
5. To simplify organizational structures and to reduce managerial positions to appropriate levels

Finally, corporate staff groups will be made more efficient and some service staff functions will be spun off from the parent company. Although the corporate staff of Mitsubishi Electric's headquarters has been almost cut in half in recent years, the company will continue to promote increased performance from a small staff through further efficiency improvements. In addition, as stated above, to promote speed and efficiency, service staff groups that provide services to group companies will be spun off as independent entities.

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