*NEWS*JAPAN’S ELECTRONIC FIRMS SQUEEZED

[Anonymous]

Japan’s electronic firms squeezed

Weak prices for digital gadgets and microchips have led to a
mixed set of results from Japan’s electronics giants Toshiba, Hitachi and
Matsush*ta.

Toshiba’s net profits rose nearly 60%, thanks to strong sales of laptop PCs
and mobile phones.

But its memory chip business struggled, leading to an 11.3% drop in the
group’s core operating income.

Hitachi’s net profits nearly trebled but core profits fell; only Matsush*ta
saw gains in both net and core profits.

Price wars are taking a steep toll on the consumer electronics giants. All
three firms issued cautious forecasts for the current year, echoing industry
giant Sony’s predictions on Wednesday. It too is being squeezed by weak chip
prices.

Tough chip market

“We do believe that the chip market has already hit bottom, but a serious
recovery is likely to come only in the second half of the year,” said Toshiba
Corporate Executive Vice President Sadazumi Ryu.

We originally took a conservative approach in assessing the impact of price decline… but the actual price erosion turned out to be bigger

Toshiba posted net profits for the year to March 2005 of 46bn yen ($434m;
£228m) compared with 28.2bn in the previous year. Sales grew 5% to 5.8 trillion
yen. Operating profits were down by 19.8bn yen to 154.8bn yen.

It forecast a 9.8% rise in operating profits to 170bn yen in the current year
to March 2006. This is likely to disappoint investors as it is about 7bn yen
below analysts forecasts, according to a Reuters poll.

Hitachi has done well from its focus on liquid crystal displays and newer,
high end products such as specialist chips for vehicle components.

Price pressures

Hitachi posted net profits of 51.5bn yen ($487m; £255m), almost three times
the 15.9bn yen profit it made in the previous full year. Sales rose 5% to 9
trillion yen.

But it too has suffered from pricing pressures, and trimmed its operating
profit forecast for the current year by 100bn yen to 300bn yen.

“We originally took a conservative approach in assessing the impact of price
declines. But the actual price erosion turned out to be bigger than that,” said
Takashi Miyoshi, a Hitachi senior vice president.

Matsush*ta said it got a boost from the Athens 2004 Olympics for sales key
products such as flat screen TVs, digital cameras and DVD players. Chief
financial officer Tetsuya Kawakami believes the first half of this year “should
be tough”.

Net profits climbed 39% to 58.8bn yen, and operating profit rose to 308.5bn
yen from 195.5bn yen.

[Author]

May 3, 2005 at 9:34 AM