Toshiba hit by US slowdown

Toshiba's US pc sales are expected to fall by 9%

Toshiba has joined the ranks of the world's suffering high-technology firms.

It is the latest to have been forced to cut profit and sales forecasts.

The Japanese giant has downgraded its profit expectations by almost a third for the financial year ending on 31 March 2001.

Sales expectations were down by 3.8%, with personal computer (PC) sales in the US expected to fall by 9%.

US computer giants Microsoft and Intel have both already been forced to admit that the US slowdown is going to have a significant negative impact on their profits.

And Japan's economists have repeatedly warned that the US slowdown will have a critical impact on Japan's ailing economy, which is trying to recover from long running recession.

Downgrade

The company attributes tougher times to the weak price of computer chips and sluggish demand for PCs in the slowing US economy.

The weaker than expected demand for mobile phones was also highlighted as a reason behind the profit warning.

Toshiba now expects to earn 96bn yen ($840m, £570m) rather than the 137bn yen first predicted.

But even given the revision, the figure is still a far cry from results in 1999 when the company reported a net loss of 32.9 bn yen.

Investment bank Credit Lyonnais is planning to reduce its share recommendation on the company from a 'buy' to a 'hold', due to additional risks surrounding Toshiba's performance from April onwards.

The stock market reacted to the revised profit forecast even before it was officially announced, and Toshiba's stock lost almost 4% of its value to close at 713 yen.

And this had a knock on effect on Tokyo's Nikkei 225 index, which slipped down 115.67 points to end the day at 13296.8 points, 0.86% lower than the previous day.