Disappointing computer sales stifled NEC?s growth and pushed down Toshiba?s profit, as both Japanese giants blamed low PC sales and price cuts.
The companies said consumers are waiting for Microsoft to update its operating system to Windows 98, and claimed price competition and lower sales of PCs in the US also damaged results. Toshiba specifically mentioned IBM's and Compaq?s price cuts and both said poor sales of electronics and computer hardware in Japan worsened their problems.
Toshiba made Y25.4 billion ($210 million) in its half year to 30 September, down 23 per cent, despite a 4.3 per cent rise in sales to Y1,824 billion ($15.2 billion). NEC made Y35.7 billion ($297 million), up 15 per cent on the first half of last year, on sales of Y1,972 billion ($16.4 billion), up 8.4 per cent.
Laptop giant Toshiba admitted price cuts eliminated the financial gain from the weak Yen, which it estimated at Y32 billion ($267 million). NEC said it hopes faster PCs will prompt a sales boom in the industry.
NEC?s memory and chip business contributed strong growth, increasing 17.5 per cent compared to last year, because of rising demand for Dram and microprocessor sales. NEC OEMs application specific Asic chips for other hardware vendors.
Analysts predicted further problems for Toshiba?s PC business in the rest of the year and the company itself predicted a one per cent fall in its full year sales and a 17 per cent cut in its profit.
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