Japan's Technology Giants Aim To Put Dismal Year Behind Them

By Agence France-Presse Japan's technology giants closed the books on an awful year April 25 and forecast a better 12 months ahead as global demand starts to pick up. Information technology leaders Toshiba Corp., NEC Corp. and Fujitsu Ltd. plunged heavily into the red in the year to March but all predicted they would erase their losses in the current year, despite caution over the strength of the global technology recovery. Toshiba suffered a net loss of 254.0 billion yen (US$1.9 billion), reversing a net profit of 96.2 billion yen previously. This year, however, looks much brighter, with Toshiba forecasting a net profit of 23 billion yen. "We consider this year a year for revival," Toshiba Vice President Kiyoaki Shimagami told a news conference. "We expect cost reductions amounting to 180 billion yen in fiscal 2002 through a cut of 11,000 jobs in the group . . . and the restructuring of businesses." Toshiba plans to invest 55 billion yen in semiconductor plants and equipment this year, compared with 50 billion yen previously. "The U.S. economy is on the way to recovery," Toshiba said in a statement. "The Japanese economy is flat and its future is unclear but signs indicate the market is over the worst, with recovery likely in IT-related areas from the latter part (of the financial year)." Rival NEC also preferred to look to the future after a dismal full year net loss of 312.0 billion yen. "The IT and network market will remain severe but the market for semiconductors and electronic devices will hit bottom later this fiscal year," Executive Vice President Shigeo Matsumoto told a news conference. "And that, we believe, underpins our profit forecast." NEC predicted it would make a net profit of 10 billion yen this year. The company also undertook heavy restructuring last fiscal year, trimming its payroll by some 8,000 workers to 141,909 and analysts believe the pruning will bear fruit in the months ahead. Fujitsu was the most cautious about its outlook after it swung to a net loss of 382.5 billion yen from an 8.5 billion yen profit in the previous year. "At this moment, the IT market remains severe," Takashi Takaya, senior executive vice president, told a press briefing. "I am not confident that IT investment in Japan and worldwide will recover." The troubled firm only expects to break even in the current year. "Performance is flagging at telecommunications carriers worldwide, and major cuts in investment are expected to continue," said Fujitsu. "One must look with caution at the prospects for a fully-fledged recovery in corporate IT spending in the U.S.," it said. The football World Cup to be co-hosted by Japan and South Korea from May 31 to June 30 also is expected to contribute to earnings for the consumer electronics companies as fans invest in top-quality televisions and videos to watch the tournament, analysts said. "The World Cup will have a similar effect to the Christmas shopping season coming early," said Tokai Tokyo Research Centre market analyst Osamu Hirose. Copyright Agence France-Presse, 2002

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