Toshiba slashes TV production

Company decides to end its domestic production of flat-panel TVs in an attempt to boost its sagging operating profit.

Toshiba showed off its L7200 edge-lit LED panel at CES back in January. Sarah Tew/CNET

Toshiba is ending its domestic production of flat-panel televisions in a bid to double its operating profit by 2014-15. The company's shares rose by more than 5 percent in Tokyo in response to the move.

The company said it aims to double its annual operating profit to 450 billion yen ($5.6 billion). In doing so, it will put a stop to the production of televisions in Japan, in which the business saw a 50 billion yen ($620 million) loss a year earlier.

Instead, it will focus on its social infrastructure business and electronic devices.

"We have shut down our domestic TV production. We are looking at all areas (of the TV business), number of models, numbers of panels, in order to restrengthen this division," Toshiba CEO Norio Sasaki told reporters.

But the company says it can still make a profit from televisions and said it will cut the number of TV models it sells by 60 percent in 2013.

Sasaki added that Toshiba has no plans to withdraw from the business altogether.

Toshiba has seen its television sales decline alongside its rivals, including Sony, Sharp and Panasonic, but was pushed along by its sale of NAND flash memory chips to Apple, reports Reuters.

Apple, which uses Toshiba memory in its iPhone and iPad devices, helped keep the company above the water in the face of a decline in television sales. In second place in NAND flash memory chips behind Samsung, Toshiba forecasts 700 billion yen ($8.72 billion) in the 2015-2016 business year.

Earlier this month, Toshiba reported its profit dropped by nearly half to $921 million. Despite the steep drop, it fared far better than its rivals.

Toshiba was the sixth largest flat-panel television maker with more than 5 percent of the global market. But the company has seen a decline in share and seeks to return to the black.

With the iPad 3 and upcoming iPhone 5, Toshiba said it would see annual operating profit of 300 billion yen ($3.75 billion) by March 2013.

This story originally posted as "Toshiba cuts TV production in operating profit return plan" on ZDNet's Between the Lines. and was updated at 12:20 p.m. PT.

 

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