Toshiba pares its forecast for PCs

Toshiba Corp, the second-largest chipmaker, lowered its personal computer shipment target by 14 percent because a spending slump in Japan is dragging down sales even as overseas demand begins to recover.

Toshiba expects domestic computer shipments for its fiscal year ending March 31 to total 950,000, down from its earlier 1.1 million target, said company spokesman Kenichi Sugiyama. Overseas shipments will beat the company's forecast by 100,000 units, limiting the overall shortfall to 1.4 percent, he said.

Japanese PC makers such as Toshiba and Fujitsu Ltd are slashing thousands of jobs to pare losses as consumers cut spending during Japan's third recession in a decade. With the jobless rate at a record high, Japanese manufacturers may be slower than rivals to recover from the industry's first annual shipments decline since 1985.

"Japanese computer makers are struggling to recover with the domestic economy faltering," said Makoto Sakuma, who manages assets at Asahi Life Investment Management Co. "I don't expect demand to pick up by the end of this year, as Japanese consumers may continue to cut spending as the jobless rate keeps rising."

Toshiba is the latest PC maker to lower its shipment projection. Tokyo-based rival Fujitsu last month cut its domestic PC target by 6 percent to 2.7 million units, pushing its global projection down 2.9 percent to 6.09 million.

NEC Corp also cut its shipment forecast, the Nihon Keizai said earlier yesterday, without citing sources. Japan's biggest PC maker lowered its domestic shipment goal to 2.85 million computers from an October target of 3 million units, the paper said.

NEC estimates that its domestic PC shipments in its fiscal year ending March 31 will be "more than 80 percent" of the 3.48 million units the company shipped a year earlier, said company spokesman Susumu Sakamoto. That would mean shipments of at least 2.78 million computers. Sakamoto declined to provide specific figures.

As demand slumps, Japanese computer makers are predicting record losses. Fujitsu last month widened its loss forecast for its fiscal year ending March 31 to a record ?380 billion.

NEC said it will probably post a record loss of ?300 billion in its current financial year. Toshiba forecast a record loss of ?260 billion for the same period.

To pare losses, PC makers are slashing thou sands of jobs.

Toshiba plans to cut 18,800 jobs, or 10 percent of its workforce, by March 2004. Fujitsu has promised to cut 21,900 jobs, or 12 percent of its total staff, this fiscal year. NEC is reducing its workforce by 14,000 in the same period.

While Japanese PC makers face declining demand, some US computer makers are seeing signs of a recovery.

Dell Computer Corp Chief Financial Officer James Schneider said last month the largest PC maker is bullish about PC sales in the next two quarters. The company raised its estimates last month for fourth-quarter sales and profit.

In Japan, the outlook may be more grim. Japanese household spending fell for a ninth straight year in 2001 as the nation's jobless rate rose in December to a record 5.6 percent.

Japanese personal computer sales at large electronics stores fell 16 percent from a year earlier in the week ended Jan. 27, extending a slide that began in May, Nikkei Market Access reported Tuesday.

PC shipments in Japan last year fell for the first time in three years, slipping 2 percent, to 11.3 million units, the Japan Electronics and Information Technology Industries Association said last week. Shipments this year may decline again as demand has been slowing since January, the group said.