Fujitsu, Toshiba report Q3 losses as woes deepen

Two of Japan's largest electronics companies, Fujitsu and Toshiba, reported Tuesday that they lost money during the last three months of 2001 and lowered their already-dismal forecasts for the twelve-month period to the end of March.

Reporting earnings for the fiscal third quarter, Fujitsu said its consolidated net loss hit ¥106.1 billion (US$809.2 million) compared to a loss of ¥69.0 billion in the same period a year earlier. Toshiba said consolidated net losses were ¥84.9 billion compared to a profit of ¥11.1 billion a year earlier. Both companies' figures are unaudited.

The companies blamed the terrorist attacks of Sept. 11 for worsening an already-bleak economic situation. Continuing cutbacks in corporate spending on information technology products compounded what Fujitsu called "unprecedented poor conditions in the semiconductor market" to lead the companies into loss.

Fujitsu saw double-digit percentage drops in sales at three of its four main divisions: electronic devices, which led the declines with a 41 percent drop on the year, telecommunications and information processing. The only bright spot was the company's software and systems business, where sales rose 3 percent, and which continues to benefit from increased sales of outsourcing services in Japan.

At Toshiba, the company saw business decline in all of its business areas. Worst performing was the company's semiconductor and electronic-device business, which saw sales drop by 31.4 percent during the period and losses of ¥46.6 billion. Its best-performing sector was the digital media division, where sales dropped 1.5 percent, hit by lower demand for personal computers but largely offset by increasing demand for optical disk drives and consumer audio-visual equipment.

Consolidated net sales at both companies dropped 13 percent on the same period a year ago -- to ¥1.1 trillion at Fujitsu and to ¥1.2 trillion at Toshiba.

With the poor third-quarter results as a backdrop, both companies also lowered their expectations for the full fiscal year, which ends on March 31. Fujitsu said it now expects consolidated net sales to be ¥5.0 trillion, a drop from its previous prediction of ¥5.2 trillion, while net losses are now expected to hit ¥380 billion, down from ¥310 billion. Toshiba cut its consolidated net sales forecast from ¥5.46 trillion to ¥5.36 trillion and also widened its net-loss forecast, from ¥200 billion to ¥260 billion.

The results are in stark contrast to those of Sony Corp., which announced its third-quarter results on Friday. Buoyed by sales of its PlayStation 2 console in the U.S. market in the run-up to Christmas, and the weakening Japanese currency, which increases the yen value of overseas sales, the company reported its largest quarterly consolidated sales in its history.

But Sony's performance may be the exception. With none of the other major electronics makers in the game console business and with such a large portion of sales taking place overseas, they are not likely to benefit to the extent that Sony managed.

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