Toshiba, the world's largest notebook computer maker, joined a growing list
of financially troubled Japanese companies today, saying it was lowering
its earnings estimates again.
Toshiba, which is also
Japan's second largest chipmaker, lowered its full year sales forecast for
the year ending March 31 because of the stronger yen against the dollar and
lower corporate spending on computers.
Toshiba's earnings situation comes amid a massive corporate restructuring at
NEC, Japan's largest chip and PC
maker. NEC said it was cutting 15,000 jobs amid huge losses. Earlier this
year, both Matsushita and Sony reported large drops in
profitability, as well.
Part of the problems at Japan's largest technology companies have stemmed
from a weak Japanese economy and ongoing consumer concerns about long term
economic prospects. Now, a rebounding yen is sapping overseas earnings
because sales are translated from foreign currencies back into yen on the
main corporate ledgers.
Toshiba said it would have yearly sales of 5.35 trillion yen ($44.7 billion), down 2
percent from its most recent forecast of $45.9 billion.
"We are doing this to reflect the impact of the stronger yen and lower
demand in Japan for computer systems than we expected," Toshiba Executive
Vice President Kiyoaki Shimagami told Bloomberg.
The company still expects to break even for the year, but said it could
stand to post a loss of $142 million-the company's first in 23 years--if
the government decides to change corporate taxes in April.
The company's PCs, chips, and consumer electronics devices were in the red
in the first half, compounded by slumping sales in its power and industrial
systems and heavy electronic machinery businesses.
While prices of dynamic random-access memory chips (DRAMs), used as the main memory in PCs, have stabilized since about last September,
demand and prices for more sophisticated logic chips are still weak, he
said. "We're still looking at the second half of the next fiscal year for
recovery," Shimagami said.
Some of those signs have started to appear. PC sales rose 16 percent in the fourth
calendar quarter of 1998. Chip sales were still on the decline in December
another 8.3 percent, but that represents a significant improvement from the
quarter ending August, when a 30 percent drop was registered.
Another reason companies like Toshiba are looking forward to the second
half of 1999: The government is scheduled to implement new tax breaks for
investment in information technology in an effort to boost the economy. The
government also issued coupons this week for seniors and children in an
effort to boost consumer spending.
Bloomberg contributed to this report.