Toshiba, M'bishi Elec Hit as Profit Warnings Loom
Friday August 17 12:22 AM ET
TOKYO (Reuters) - Shares in chipmakers Toshiba Corp and Mitsubishi Electric Corp fell on Friday, extending the previous day's losses as the market braced for more profit warnings from Japan's beleaguered electronics sector.
Many Japanese chip and components makers saw their share prices weaken this week, with sentiment soured by a steeper-than-expected cut in profit forecasts late last Friday by custom chipmaker Rohm Co Ltd, considered by one of the Japanese electronics sector's more defensive shares.
Toshiba, Japan's biggest chipmaker and the world's second largest, ended Friday morning trade down 3.6 percent at 589 yen, after falling as much as 5.2 percent early in the session. Mitsubishi Electric was down 0.2 percent at 498 yen, after sliding to a 25-month low of 491 shortly after the opening.
Several Japanese electronics executives recently said they have seen no signs of a pick-up in orders that would normally occur by July if this year's Christmas buying season was likely to bring a rebound in demand. Many are now resigned to waiting until next summer before the market turns around.
Two of Japan's five chipmaking conglomerates, NEC Corp and Fujitsu Ltd, lowered their earnings projections late last month from relatively optimistic numbers released just two months earlier.
The other three -- Toshiba, Hitachi Ltd and Mitsubishi Electric -- have yet to alter their forecasts, but many analysts have already cut their earnings estimates for the three amid expectations they will post losses in chip operations for the business year to next March.
Hitachi's overall earnings are expected to be relatively buoyant, however, due to brisk growth in revenue from data storage systems.
Hitting the chipmakers particularly hard has been a tumble in prices for memory chips, especially commodity-like products such as dynamic random access memory (DRAM) chips.
Toshiba said last week it would cut its DRAM chipmaking capacity by one-quarter by the end of September, to the equivalent of 20 million 64-megabyte (MB) chips per month.
The cuts include halving monthly output of high-speed Rambus DRAM chips to eight million a month, on a 64-MB basis, due to unexpectedly sluggish market penetration of the chips, which are used with Intel Corp's Pentium 4 processor.
A Toshiba spokesman said some of that reduction would be offset by increased output of the synchronous DRAM chip, another fast memory chip.
Toshiba said there would be no layoffs in conjunction with its cut back in DRAM chips. However, the spokesman said the company as a whole may consider reducing its workforce via an early retirement scheme, which has become a popular vehicle for payroll cuts at other big Japanese manufacturers. |
