Toshiba Corp sees deep plunge in profits
Yuzo Saeki
Tokyo, Jan 20: Japanese electronics giant Toshiba Corp said on Tuesday that its group profits would dive a painful 85 per cent for the current business year as demand for personal computers withered and memory chip prices fell.The company said its revised group net profit estimate was now 10 billion yen ($76.9 million) for the year ending on March 31, down from the 60 billion yen ($461 million) profit it forecast in November. By comparison, in 1996/97, Toshiba posted net profit of 67.08 billion yen ($516 million). ``A slowdown in our personal computer business in the United States, as well as in Japan, was the biggest reason for the downward revision," Toshiba managing director Kiyoaki Shimagami told a news conference. The company's personal computer operations may post a group operating loss in the current business year, Shimagami said. Toshiba said it had also cut its forecast for global personal computer sales in 1997/98 to 700 billion yen ($5.38 billion) from an earlier forecast of 740 billion yen
($5.69 billion). Toshiba has struggled to slim its personal computer inventories amid slow sales in November and December, mainly in the United States, Shimagami said. In order to clear excess machines from its shelves, Toshiba has considered introducing a custom personal computer service, which would allow consumers to choose the specifications of their computer system rather than select from Toshiba's pre-set configurations. Some US mail-order computer retailers, like Gateway 2000, offer consumers similar choices. Toshiba is also considering trimming its US operations, Shimagami said. He did not specify what steps the firm was contemplating. Sluggishness in home electronics and electronic components sales were also cited as necessitating the revision. The company expects to post a group operating loss of 30 billion yen ($230 million) in the current business year on home electronics operations, Shimagami said. However, Toshiba expects to post an operating profit in its semiconductor operations, he said.
Shimagami added a reappraisal of Toshiba's dollar-denominated debts, borrowed mainly by Southeast Asian subsidiaries, is expected to reduce its group pre-tax profits in the current business year by about 20 billion yen ($153 million). Toshiba also lowered its estimate for parent-only current profit -- pre-tax profit including losses and gains on investments -- to 35 billion yen ($269 million) for 1997/98, from its November estimate of 80 billion yen ($615 million). In 1996/97, profits totalled 96.80 billion yen ($744 million). Following the announcement, Toshiba shares fell 17 yen -- more than three per cent -- to 534 by midday in heavy-volume trading on the Tokyo Stock Exchange.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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