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Tuesday, Oct. 30, 2007

Toshiba profit rises on PC, chip sales

Staff writer

Toshiba Corp. said Monday its group net profit rose 17.6 percent to ¥45.7 billion in the fiscal first half thanks to brisk sales of computers in Europe and the United States and its core semiconductor business.

The electronics giant posted a record ¥3.7 trillion in sales in the April-September period, topping the ¥3.6 trillion forecast it offered in July. However, pretax profit dropped 8.2 percent to ¥76.8 billion due to changes in the tax code introduced in April that caused Toshiba to revise its depreciation system.

Like many electronics makers, Toshiba suffered from price declines of its products such as computers, liquid crystal displays and memory devices. As a result, the company bled ¥732 billion.

The LCD business plunged to an operating loss of ¥7.7 billion, down from a profit of ¥1.4 billion, as sales of cell phones dropped and the LCD price decline made matters worse.

Vice President Fumio Muraoka refused to provide figures for the company's flat-TV division, but said Toshiba suffered a loss in the tens of billions in the first half.

"Strong sales of nonmajor TV manufacturers in the U.S. and cheaper (rival) products pushed down our sales," Muraoka said.

However, profit in its computer business jumped to ¥17.3 billion, recovering from a loss of ¥7.4 billion in the same period last year, while sales were ¥513 billion, up 14 percent.

"We've got to a point in this business where a profit is ensured," Muraoka said.

The purchase of Westinghouse Electric Co., a U.S. nuclear reactor builder that Toshiba took control of last year, and vigorous sales of its electricity business also pushed up its sales in the social infrastructure division twofold to ¥20 billion.

But the ups and downs of those products may be a minor problem for Toshiba as long as it rakes in big profits from its core semiconductor business, including NAND flash memory and system LSI (large-scale integration) chips.

Operating profit in the semiconductor division increased slightly to ¥65.1 billion from ¥64.9 billion in the same period last year. Sales rose 28 percent to ¥718 billion despite a 60 percent price decline in its NAND flash memory chips.

Toshiba revised its full-year forecast upward. It plans to post ¥180 billion in group net profit, raising its initial forecast of ¥120 billion. The company also plans to post ¥7.8 trillion in sales for fiscal 2007, up from its initial forecast of ¥7.5 trillion.

Monday's announcement came after Toshiba said earlier this month that it plans to purchase Sony Corp.'s advanced chip operations for chips that power the PlayStation 3 video game console. The sale is expected to be completed by March.

Mitsubishi Electric up

Mitsubishi Electric Corp.'s group net profit surged 62.1 percent in the first six months of business 2007 from a year earlier to ¥91.59 billion amid greater sales of heavy machinery, computerized industrial machines and electronic devices.

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The Japan Times

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