As Its Chip Business Struggles, Japanese Electronics Giant Plans to Trim Full-Year Earnings ForecastToshiba Corp., under pressure from its deteriorating chip business, aims to gain momentum from its LCD television sets.
Meanwhile, Toshiba plans to cut its earnings estimates for the current fiscal year ending in March, dragged down by the chip business, which posted an operating loss of 30.2 billion yen ($288.3 million) for the first quarter ended June. The company said it "is compiling its earnings outlook and will release details once they are finalized."
New Regza-branded LCD TVs are Toshiba's push for higher sales. Above, a display in Tokyo.
Toshiba aims to grab more than 10% of the global LCD TV market in the year ending March 2011, up from the 8% estimated for the current fiscal year. "We've got to grow in the world market outside Japan," said Yoshihide Fujii, senior vice president of in charge of Toshiba's digital media-network business. "We can't make money in Japan."
Toshiba expects most of the sales growth to come from Europe and the U.S. By the year ending March 2011, the company plans to sell four million LCD TV sets a year in Europe, three million in the U.S., three million in Asia and three million in Japan. Toshiba expects total annual sales of 13 million units to bring in 750 billion yen, up from the 480 billion yen for fiscal 2008.
Driving Toshiba's push for higher sales is a series of new Regza-branded models. For the year-end shopping season, it has lined up 20 models with some features such as an automatic picture adjustment.
Competition in the LCD TV market is intensifying as other electronics manufacturers target increased sales of products that are expected to see higher demand. Sony Corp. has stated its ambition to become the world's biggest LCD TV vendor by the fiscal year ending March 2011 by beating out South Korean electronics giant Samsung Electronics Co.
Toshiba shares fell 3.5% to 465 yen Thursday after hitting a three-year low in early trading. "Investors are concerned about how bad Toshiba's earnings will be," said Takeo Miyamoto, an analyst at Deutsche Securities Japan.
He said Toshiba shares have also been pressured by a bid by Samsung Electronics Co. to purchase U.S. flash memory-card maker SanDisk Corp., Toshiba's joint-venture partner. SanDisk's board Wednesday rejected Samsung's $5.85 billion cash offer.
But Mr. Miyamoto said he thinks Toshiba couldn't stand still. "Toshiba may take action because it won't let Samsung and SanDisk go together," he said. Toshiba declined to comment on whether it will bid for SanDisk.
By: Yuzo Yamaguchi
Wall Street Journal; September 19, 2008
