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To: TideGlider who wrote (14533)	2/10/1998 11:54:00 PM
From: Shakush	Read Replies (1) \| Respond to of 25960

Hitachi: Second profits warning from ft.com WEDNESDAY FEBRUARY 11 1998 By Paul Abrahams in Tokyo Hitachi, the Japanese electronics group, yesterday issued its second profits warning in five months, revealing it would post a net loss in the second half to March. The company, viewed as a bellwether of Japanese manufacturing, cautioned that group net profits this year would fall 77 per cent to just 20bn ($160.8m). In the first six months it made 37.67bn. Hitachi blamed the profits collapse on the deterioration in the semiconductor and consumer electronics markets. It cautioned the markets were likely to remain difficult next year. The warning is the latest from Japan's big integrated electronics groups. In recent months, the other big four - Toshiba, NEC, Mitsubishi Electric and Fujitsu - have all announced lower forecasts for this financial year. The deterioration in business conditions has been rapid. In October, Hitachi predicted net profits of 89bn. In 1991, it posted peak earnings of 230bn. Richard Kaye, analyst at Merrill Lynch in Tokyo, said: "I already expected a weakening in Hitachi's semiconductor division. I also expected a weakening in the consumer electronics and audio-visual division. But I didn't expect anything on this scale." Pre-tax profits would be 150bn compared with last year's 263bn on sales down 1.1 per cent at 8,430bn, the company said. The decline is despite cuts in capital expenditure related to semiconductors, from the 150bn originally planned to 120bn this financial year. There has been a sharp downturn in Japan's consumer electronics market, caused by a collapse in consumer confidence. Nippon Electric Big-Store Association estimates year-on-year sales of audio-visual equipment fell 14.5 per cent in December, while those of heating and cooling units were down 18.9 per cent Semiconductor prices have fallen in recent months because of decelerating demand, oversupply and slumping prices. Last month, NEC said prices of standard chips had fallen from $8 in mid-1997 to just $2 in December. Hitachi has said it would cut D-Ram production by 20 per cent during February and March. Yesterday, Yoshiki Yagi, managing director, said the group it would take an exceptional charge of 30bn-35bn to cover the costs of pulling out of TwinStar Semiconductor, its D-Ram joint venture with Texas Instruments of the US. The group had already announced it would post 19.3bn worth of foreign exchange losses because of the collapse of the Malaysian and Thai currencies.