JULY 2008 W5 ALERTToshiba Bleeds Red Ink In First Quarter Results
<July 30, 2008><Nikkei-TOKYO>Saying, “It was a terribly disappointing outcome,” Senior Managing Director Fumio Muraoka stepped up to announce Toshiba Corp.’s fiscal first quarter results. It was not a pretty picture. For the first time in years, the company reported a group net loss of ¥11.6 billion (about $107.3 million at current exchange rates), attributed largely to their struggling semiconductor business.
According to a report in the Nikkei, this was the company’s first loss since Atsutoshi Nishida became president in June 2005. Nishida’s slogan at the time was “sustainable growth accompanied by profit.”
Toshiba’s power generating division and television division both had growth in profits that were more than offset by a ¥30.2 billion operating loss in the semiconductor division.
The company noted that three-quarters of the loss came from slack demand for system chips that are used in video game systems. The remainder of the loss was due to steep price declines impacting their NAND flash memory business.
Still the company says it will not deviate from its investment plans for the semiconductor division including building two new NAND flash memory factories in the spring of 2009. The company will invest more than ¥1.7 trillion in those factories.
The company believes that solid state drives will ultimately replace hard drives as the primary storage medium for personal computers and Toshiba intends to be a leader in that technology. With a projected time frame of this occurring in 2012, it remains to be seen if investors and analysts will be that patient.