Toshiba Corp president Tadashi Okamura said Japan's largest maker of notebook computers will shift more computer production overseas and focus on its display business to improve profitability.
"I regret that Toshiba didn't ride the wave of growth in the flat-screen television business and missed the trend of commoditization for computers," Okamura said at a briefing in Tokyo yesterday.
"We must improve the PC operations and establish a profitable display business," he said.
Toshiba, which makes the Tecra and Satellite models, is losing money on computers even as market researcher IDC predicts global personal-computer shipments will increase 11 percent in both this year and next as notebook sales improve.
The company will increase contract manufacturing and shift more than half its PC making overseas, up from 30 percent now. Workers will also be shifted to the display business from PC operations.
In January, Toshiba forecast a ?26.5 billion (US$249 million) loss at the PC division for the year ended March 31, even after cutting 500 jobs.
Toshiba was the world's fifth-largest PC maker last month, behind Dell Inc, Hewlett-Packard Co, International Business Machine Corp and Fujitsu Ltd, according to researcher Gartner Inc.
The company's semiconductor business, in particular its unit making flash memory is bolstering profitability.
"Toshiba should focus on flash memory where it has the most strength," said Akihide Kinugawa, who helps manage the equivalent of about US$185 million at T&D Asset Management Co.
"The PC business will never produce the kind of stable and substantial profit it used to even if they shift production to China," Kinugawa said.
Toshiba in January estimated net income for the year ended March 31 will be ?25 billion.
"Our PC business stumbled and we can no longer call it one of our profit pillars," said acting chief financial officer and corporate senior vice president Sadazumi Ryu.
"We have to work on our digital products. The digital consumer electronics market grew faster than expected," Ryu said. "We thought about what we can do and concluded that we have a lot of components. There's potential there."
Toshiba also said today it targets ?280 billion operating profit on sales of ?6.2 trillion by the business year ending March 2007.
The company estimates sales totaled ?5.65 trillion and operating profit of ?140 billion for the year ended last month.
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