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 user 2005-05-03 at 9:33:00 am Views: 73
  • #9228
    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

    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

    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.