Toshiba slashes outlook after $1B loss in 1H


Toshiba's president advises caution as Japanese chipmakers mull a dumping suit against Korean competitors

By staff and wire reports

TOKYO, Japan -- Japan's largest chipmaker, Toshiba, said Friday it had a net loss of 123.1 billion ($1 billion) for the first half of the business year.

The company also recorded a group operating loss of 98.4 billion yen in the six months through September. That was worse than its target of an 80 billion yen loss, on 2.51 trillion yen in sales.

Toshiba, the world chipmaking No. 2 behind Intel, is on track for its worst year yet. It warned of a heavy loss for the full year, which runs through March, shocking investors by revising down its forecasts sharply.

The net loss was down from a 53.9 billion net profit the same time last year, when it posted a 106.0 billion operating profit.

Chipmakers getting battered

The company now predicts a net loss of 200 billion yen, worse than its August forecast of a 115 billion loss. It also expects an operating loss of 110 billion yen on 5.46 trillion yen in sales.

NEC, another of Japan's Big Five chipmakers, also reported freely flowing red ink on Friday.

It posted a net loss of 30 billion ($244 million) for the first half of the business year. It predicts a net loss of 100 billion for the year, also a revision.

All of Japan's big chipmakers have been cutting jobs and slashing forecasts.

Toshiba's bad showing forced it to rejig its forecasts for the rest of the year. The company also said it would speed up its job-cutting plans and cut spending.

President Tadashi Okamura said the company would move forward plans to eliminate 3,000 jobs in its chip division, completing the cuts by March 2002 instead of March 2004.

It is getting rid of 19,000 jobs in all. Toshiba executives are worried because they do not yet know the full downside of the Sept. 11 attacks in the United States, which have hurt demand for consumer electronics.

Toshiba advises 'caution' on dumping lawsuit

Japanese chipmakers such as NEC have accused the large South Korean chipmakers of dumping chips in the Japanese market.

Samsung Electronics and Hynix Semiconductor are the world No. 1 and No. 3 makers of Dynamic Random Access Memory chips, a market that has slumped 90 percent this year.

There has been speculation that Japanese chipmakers NEC, Toshiba and Mitsubishi Electric are about to file suit. But Toshiba's Okamura warned against jumping to conclusions.

"We need to be extremely cautious in considering any dumping complaint," he said on Friday.

Toshiba, which also makes computers and other electronics goods, blamed most of the loss on poor performance in its chip divisions.

On Friday, Toshiba revised its profit estimate for the full year, predicting a net loss of 200 billion yen ($1.6 billion). It had forecast a loss of 115 billion in August, already way off the 96.2 billion yen that it made last business year.

Toshiba also cut its spending on its chip operations, to a capital expenditure budget of 50 billion yen ($407 billion), from its earlier forecast of 75 billion yen.

Chip sales are likely to hit 680 billion yen, rather than the earlier forecast of 770 billion yen, it said.

Toshiba stock closed down 4.7 percent at 510 yen on Friday. NEC ended the day at 1,242 yen, down 2.8 percent.

Toshiba has rallied from a record low of 423 yen that it hit earlier in October. But it is still way down for the year.

Fujitsu was the first of the Big Five Japanese chipmakers to report earnings. It posted an operating loss of 59.1 billion yen ($482 million) for the first half of the business year.

That was down from a 100.3 billion yen operating profit the same time last year. The company slashed its profit outlook, saying it would merely break even in operating terms for the year. Its net numbers look much grimmer.

Fujitsu ended the day off 3.3 percent at 962 yen. It had rallied earlier this week ahead of its numbers, which analysts expected to be poor.