Toshiba, Fujitsu warn on profits


Fujitsu and Toshiba were reporting third-quarter earnings for the first time, and as expected they weren't pretty

TOKYO, Japan -- Two of Japan's top chipmakers warned on profits Tuesday, dealing hopes of a rebound in the industry a blow.

Toshiba Corp., the world's second largest chipmaker after Intel, said it now expects a net loss of 260 billion yen ($1.9 billion) this fiscal year. That's worse than the 200 billion yen loss it forecast in October.

Rival Fujitsu Corp. weighed in with a forecast that it will post a net loss of 380 billion yen ($2.8 billion) in the fiscal year, also a bigger drop than it had previously predicted.

The figures were a little worse than expected. But analysts said they were not a shock and merely reflected what they already knew -- that the chip industry is trying to come back after very tough times.

Alongside their fiscal year forecasts, both companies also reported their third quarter earnings for the first time on Tuesday. Most Japanese companies have a business year that ends in March.

Toshiba said it had a net loss of 84.9 billion yen ($635.5 million) in the December quarter. Toshiba said it made 11.1 billion yen the same quarter last year. Like most Japanese companies, it used to file only half-yearly reports.

Lowered sales

Meanwhile, Fujitsu posted a net loss of 106.1 billion yen ($795 million) for the third quarter, which it said compares with a net loss of 69.0 billion yen for the same period.

At the same time as cutting their profit expectations, both Toshiba and Fujitsu lowered their sales projections. Both companies expect declines after what many in the chip industry call the worst year, ever.

Toshiba predicted that its sales would decline almost 10 percent for the business year, to 5.36 trillion yen. Sales were down 13 percent in the third quarter, to 1.21 trillion yen.

Fujitsu expects sales of 5.0 trillion yen, off 8.8 percent over the prior business year.

At a press conference, the company predicted times would remain tough for chip companies into the business year that ends in March 2003.

A Fujitsu executive said the company only foresees a turnaround in the fiscal fourth quarter -- or this time next year.

Stock knock

The joint announcements dealt Japanese stocks a knock. Toshiba stock closed down 1.1 percent at 439 yen. Fujitsu, which made its announcement after the close, lost 2.5 percent to 865 yen.

Those declines helped drag the tech-oriented Nikkei index down 1.91 percent, to 10,026.03. But Japanese stocks had opened lower, and market watchers said Tokyo investors are already looking to U.S. stocks to lead any rebound.

Several chip producers have however been raising prices in Asia, citing strong demand from countries such as China. That has fueled hopes of a rebound in the beleaguered industry.