Toshiba says group net profits for the current fiscal year, ending on 31 March, will slide by as much as 85 per cent.
Blaming slow PC sales in Japan and the US and an oversupplied chip market, Toshiba estimates that group net profit will be just US$76.9 million (Yen10 billion) compared to $516 million for the 1997 fiscal year.
At a press conference in Japan, Toshiba managing director Kiyoaki Shimagami said that "a slowdown in our PC market in the US as well as in Japan was the biggest reason for the downward revision." He warned that Toshiba may post a group operating loss in the current business year.
The Asian currency crisis has also contributed to the tumble. Dollar denominated debts incurred by subsidiaries in south east Asia are expected to shave $153 million from group pre-tax profits in the current business year.
Underlining the slowdown, IDC says sales of PCs in Japan rose only fractionally in 1997 from 8.09 million units to 8.109 units.
Analysts say the honeymoon period when Toshiba was selling high priced notebook computers to the corporate market is now over. Cut throat competition, particularly in the US, has already forced Toshiba to lower its prices.
To keep pace with a market trend towards cheaper notebook machines, around the $1,000 mark, Toshiba is now selling its Satellite 305CDS (with a 166MHz Pentium MMX Intel Processor) for $1,699.
Toshiba has also said it may consider slimming down its US sales operations. "Toshiba is in a now or never moment in the US notebook business and we are now carefully studying our market strategy for the spring," explained a spokesperson for Toshiba.
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