Toshiba 1Q Loss Widens As Chip Ops Continue To Suffer

Toshiba Corp. (6502.TO) said Wednesday that its group net loss ballooned in its fiscal first quarter as restructuring costs and red ink at its chip operations continued to weigh heavily.

And in a sign that market conditions remain tough for chip makers, the company left its forecast for the full fiscal year ending in March unchanged, projecting a net loss of Y50 billion.

For the April-June period, the Japanese electronics conglomerate reported a Y57.80 billion net loss. The result was much worse than the Y11.61 billion loss the company racked up in the same period a year earlier. The result was also larger than a consensus projection for a Y38.4 billion loss compiled by data provider Thomson Reuters from a survey of 14 analysts.

The company's revenue during the three months fell to Y1.340 trillion from Y1.618 trillion and it posted a Y37.59 billion operating loss, compared with a Y22.88 billion loss a year ago.

Mired in huge losses at its chip operations, Toshiba is in the middle of major restructuring steps that include cutting temporary jobs and improving chip production efficiency. The company raised about Y500 billion last month to improve its balance sheet and during the April-June period it spent Y10.2 billion on its restructuring, mainly at its chip operations.

For the April-June quarter, Toshiba's semiconductor operations lost Y36.2 billion on an operating basis, wider than a Y30.2 billion loss a year ago but much smaller than the enormous Y103 billion loss it posted in the January-March quarter. The company said it aims for its chip segment to turn a profit in the second quarter, but it declined to say how much it will make or lose in that segment this fiscal year.

Prices of NAND flash memory chips have started to increase due to improving demand and as suppliers cut production earlier this year due to a glut of chips.

Toshiba is the world's second-largest producer of NAND flash memory chips, which are widely used in music players and digital cameras, by revenue after Samsung Electronics Co. of South Korea.

Analysts say it remains unclear whether Toshiba will be able to turn around its earnings in the remaining three quarters of this fiscal year.

Although Toshiba's first quarter group operating loss was more or less in line with expectations, its net loss is larger than expected, said Tokai Tokyo Research Center analyst Haruo Sato.

He added that restructuring costs are weighing on the company's net earnings as Toshiba tries to return to profit on an operating basis for the current fiscal year.

But Toshiba is not the only Japanese electronics maker actively engaged in drastic measures to turn itself around. On Tuesday, rival Hitachi Ltd. (6501.TO) said that it will shake up its structure by turning five of its listed subsidiaries into wholly-owned units in a bid to shift its focus to its infrastructure business.

Reflecting the uncertain outlook for the chip market, NEC Electronics Corp. (6723.TO), the chip-making unit of NEC Corp. (6701.TO), said Wednesday that it suffered much wider net loss in the April-June period from a year earlier. But it left unrevised its full year outlook, citing signs of recovery in demand for electronic devices used in consumer appliances and cars. link....