David RichardsPlunging TV prices and the battle over HD DVD Vs Blu-ray have hurt Toshiba who has reported a 28 percent drop in its second quarter profit. Also contributing is one-time expenses for property value calculations that offset solid sales in computers and chips.
Despite this Toshiba raised its full-year profit forecast by 50 percent, beating some analysts’ estimates, on a one-time gain and demand for semiconductors used in mobile phones and portable music players such as Apple Inc.’s iPod.
Toshba earned $219.2 million for the July-September quarter, down from 34.79 billion yen the same period the previous year.
Quarterly sales rose 18 percent to 2.025 trillion yen ($17.73 billion) from 1.709 trillion yen a year ago.
Toshiba said sales rose in televisions, but plunging TV prices hurt profit. Price erosion also hurt its business in computer chips, called memories and system LSIs, used in digital cameras, portable players and other gadgets.
Personal computer sales contributed to profit, as did the addition of U.S.-based nuclear power company Westinghouse into the Toshiba group, which lifted overseas sales of power plants and equipment.
Net income will probably rise 31 percent to a record 180 billion yen $1.6 billion in the year ending March 31, Toshiba said today, exceeding the 161.3 billion yen average of 15 analyst estimates compiled by Bloomberg. The Tokyo-based company in April forecast annual earnings of 120 billion.
Toshiba, Japan’s biggest chipmaker, also raised its revenue and operating profit estimates on sales of chips. The company is closing the gap with leader Samsung in semiconductors, which account for more than 40 percent of operating income, by focusing on smaller, more cost efficient chips and speeding up production.
“Toshiba appears to be relatively successful in its choice of businesses to focus on,” said Fumiyuki Nakanishi, a strategist at SMBC Friend Securities Co. in Tokyo.
The company in June said it is speeding up plans to increase production of flash chips by about six months to meet demand from mobile-phone makers. The chipmaker will process 60,000 wafers a month, compared with its original target of 35,000, at its fourth plant in Yokkaichi by the end of June 2008. That compares with a previous schedule for the quarter ending December 2008.
Toshiba said the outlook remains uncertain, citing worries about the future of the U.S. retail market and the subprime mortgage crisis. The U.S. economy is a major market for Japanese electronics companies.
But the Tokyo-based manufacturer revised upward its outlook for the full fiscal year through March 2008 because of income expected from the sale of its downtown Tokyo building in the second half.
Toshiba expects a profit of 180 billion yen ($1.58 billion) for the fiscal year, up from the initial projection for a 120 billion yen ($1.05 billion).
It is forecasting 7.8 trillion yen in ($68.3 billion) annual sales, better than the earlier 7.5 trillion yen ($65.67 billion).
Toshiba also makes various electronics products, including refrigerators and washing machines. Like other Japanese makers, it took a battering in recent years from cheaper rivals but has been reshaping its operations.
For the six months through September, Toshiba’s profit improved 18 percent to 45.66 billion yen ($399.8 million) from the same period the previous year. First half sales climbed 17 percent on year to 3.690 trillion yen ($32.31 billion).
Toshiba holds a 77 percent stake in Westinghouse, based in Monroeville, Pa. Toshiba bought Westinghouse from the U.K.’s British Nuclear Fuels PLC last year for $4.2 billion.