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Toshiba takes a tumble after global crisis hits chip market

TOSHIBA Corp, Japan's top chipmaker, tumbled to a record annual loss amid sinking global demand that has forced it to cut thousands of jobs.

Toshiba reported a 343.6 billion yen (US$3.5 billion) net loss for the fiscal year ended March yesterday, compared to a 127.4 billion yen profit in the previous year. It was the company's biggest loss to date and its first annual net loss in seven years.

The Tokyo-based company's annual sales declined 13 percent to 6.65 trillion yen, largely due to faltering business in semiconductors as well as digital equipment and home electronics. For the January-March quarter alone, the company suffered a net loss of 184 billion yen on sales totaling 1.67 trillion yen.

The company blamed "the shrinkage of the overall market caused by the fast-spreading global recession, steeper than expected declines in semiconductor prices" and the yen's sharp appreciation.

Toshiba expects to stay in the red for another year. It is projecting a net loss of 50 billion yen for the fiscal year ending March 2010. The company forecast sales to rise modestly, to 6.8 trillion yen on an improvement in the mobile phone and chip businesses, as well as home appliances.

"Projections indicate that the business environment will remain in severe condition" throughout the year, Toshiba said.

It had earlier projected a 280 billion yen loss, but said last month that it was expecting a much bigger loss from writing off 85 billion yen in deferred tax assets. But it said its operating loss was a smaller-than-expected 250.2 billion yen versus a 246.4 billion yen profit a year earlier, cushioned by the stabilization of prices of flash memory chips used for music players and digital cameras.

Hit by a plunge in demand amid the global economic slump, Toshiba said in January that it would cut 4,500 contract workers by the end of March this year and delay or cancel investments in new chip plants. Toshiba also plans to cut 3,900 more contract jobs before the end of March next year, a company spokesman said.

The company aims to return to profitability by cutting as much as 300 billion yen in costs and raising capital through a stock offering and bonds.



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