Nikon's net profit drops by 66 percent during first half

Nikon Corp, the second-largest maker of machines that etch circuitry onto silicon wafers, said first-half profit fell by about two-thirds and expects a full-year loss as chipmakers cut spending on equipment.

Group net profit fell 66 percent to Japanese yen 3.04 billion (US$24 million), or Japanese yen 8.22 a share, in the six months ended Sept. 30, from Japanese yen 8.95 billion, or Japanese yen 24.18, in the year-earlier period.

That's in line with the company's May forecast of Japanese yen 3 billion profit. For the full year, Nikon expects a Japanese yen 11 billion loss, compared with its earlier forecast of zero profit.

Orders for Nikon steppers, which are used to etch chip circuitry by laser, are falling as chipmakers such as Toshiba Corp and Micron Technology Inc cut spending amid slumping demand for chips used in mobile phones and personal computers. Orders won't recover until the second half of next year, Nikon Executive Vice President Kenji Enya said.

"The outlook for the chip equipment industry is really bad," said Makoto Sakuma, who helps manage Japanese yen 100 billion in equities at Asahi Life Investment Management Co, which holds Nikon shares. "Why would chipmakers want to increase spending now?"

First-half sales rose 12 percent to Japanese yen 235.1 billion as Tokyo-based Nikon filled backlogged orders.

Nikon slashed 1,000 part-time jobs in the first half to 2,100.

It will cut an additional 600 part-time jobs in the second-half ending March next year, with 1,500 remaining, Enya said.

Nikon has about 36 percent of the worldwide market for stepper machines. Steppers accounted for 72 percent of group operating profit in the year ended March 31.

The company, which also makes digital cameras, said in September revenue may slump if the US economy slows because of the terrorist attacks.

Nikon's shares, down 12 percent this year, fell 1.7 percent to Japanese yen 1,070 on Japanese exchanges before the earnings were released. Rival Tokyo Electron Ltd's shares have risen 5 percent this year.

Orders for Japanese-made chipmaking equipment in September fell 76 percent -- the ninth straight monthly decline -- to Japanese yen 43.3 billion (US$359 million) from the year-earlier month, the Semiconductor Equipment Association of Japan said.

Orders are an indicator of earnings at chip equipment makers such as Nikon, Tokyo Electron Ltd and Advantest Corp because sales tend to lag orders by about half a year. The lead-time for steppers is typically about a year.