Toshiba, Fujitsu join Japanese tech peers in booking massive 3Q losses

Toshiba and Fujitsu both still expect a profit for the full fiscal year, but have slashed their forecasts

Toshiba and Fujitsu, two of Japan's largest tech companies, both said Tuesday they booked deep losses during the October-December quarter, blaming a spike in component costs caused by Thai flooding and a tough market for consumer electronics.

Toshiba said it was weighed down by its struggling TV business, which faced lower sales in Japan as a boost from the nationwide switch to digital broadcasting faded and government discounts ended, even as intense competition choked off profits. The company said it booked a ¥10.6 billion (US$136 million) loss during its third quarter, down from a ¥12.4 billion profit a year earlier.

Fujitsu said operating profit from its consumer goods fell by nearly half compared to a year earlier and its semiconductor business stumbled into an operating loss. The company said its smartphone sales are exceeding expectations, but it still had a ¥4.3 billion loss during the period, versus a ¥16.5 billion profit in the year-earlier period.

Both companies slashed their earnings targets for the current fiscal year through March, but said they are still on track to book an annual profit.

Tuesday's results were the latest in a series of grim third-quarter results for Japan's tech giants, whose are struggling to generate profits with their digital products even as foreign competitors such as Samsung and Apple report staggering profits. NEC said last week it is planning to cut 10,000 workers and now forecasts a $1.3 billion loss for the year, and tech bellwether Sony, which reports Thursday, also projects to finish deeply in the red.

Japanese firms have also been hurt by the strong yen. A strong local currency can negatively impact profits earned abroad.

Like many of Japan's large tech firms, both Toshiba and Fujitsu were buoyed by their non-consumer business. Toshiba said its memory and display components had a strong quarter, while Fujitsu reported strong profits at its large services division, which includes system integration and outsourcing.

For many Japanese companies including Toshiba and Fujitsu, the fiscal year runs from April through March.

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Jay Alabaster

IDG News Service
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