Memory prices hit Toshiba profits

 

Gallery

Posted on 29 Jul 2008 at 14:31

Toshiba posted its first quarterly loss in three years, as flash memory prices continue to fall.

During the quarter between April and June, Toshiba notched a quarterly net loss of 11.61 billion yen, reversing from a 20.63 billion profit.

Toshiba, which is the world's second largest maker of NAND flash memory chips, says it aims to hit its full-year operating profit target of $2.70 billion by pushing its power systems and PCs in the following quarters.

"Toshiba's full-year targets are too ambitious," says a Japanese analyst who asked not to be named. "Its chips will probably post a loss in April-September, and I am betting it's going to have to revise down its outlook -- maybe in September or October."

Toshiba was also hit by high start-up costs on new system chip lines it bought from Sony and sluggish sales of chips used to control the PlayStation 3 game console, flat TVs and digital cameras.

Those hits came just as Toshiba battles chronic price falls in NAND memory that have knocked its share price down 29% since early June.

However, the company says it expects NAND price falls to ease to a 15% decline in July-September from the previous quarter, against a 20% quarterly fall in April-June.

The company has also targeted a profit of more than 30 billion yen on its semiconductors between July and September to cancel out the first quarter microchip loss.

The results have put pressure on plans to nearly double NAND chip production capacity to 210,000 wafers per month by March 2010. In 2010 Toshiba also plans to build two more factories.

Author: Reuters