Presentations & Events


- ended March 2004 (For 165th Fiscal Period)

Presentation for FY2003 Q1 Results

For 1st Quarter ended June, 2003   - July 30, 2003

Q & A Session

Q1. You said you do not change the forecast for the whole year. Please give us more detailed explanation?
Our updated forecast for the first fiscal half has been slightly lowered from our original plan. PC prices started to fall in May, hurting our profitability. Since the beginning of July, a task force including the President has been working on immediate and mid-term action plans.
Q2. Have you seen any good sign in July results to think you do not have to review your forecast?
Semiconductor sales are better than expected. LCDs remain in the difficult situation, but have seen improvements in operating income by JPY 1 billion. In Digital Media, the situation is still not good.
Q3. Will you revise your forecast for the first fiscal half?
We can take some actions immediately, and will first of all gauge their effectiveness. If necessary, we will review our forecast, but otherwise, will not do so.
Q4. Do you still believe you can achieve your budgeted PC operating income in FY2003 (JPY 22 billion)?
For PCs and peripherals alone, we have to admit it is very difficult. We think we can achieve the Group's budgeted operating income, as profits from Electronic Devices and Social Infrastructure Segments look to be higher than originally expected.
Q5. What action plans are you considering and when will you announce details?
The PC task force is determined to implement measures in areas such as sales, manufacturing and fixed costs by the end of August. We will make an announcement at the beginning of September. The situation is not good in audio and visual equipment, as we do not have large-screen PDP and LCD TVs. But we will launch these products in the market in August and be ready to compete with other players.
Q6. What is your thinking on home appliances?
The air-conditioner business is in a severe situation, but we do not expect the impact of Japan's cold summer to lower operating income by more than JPY 2 billion.
Q7. Could you please explain about equity in the earnings of affiliates?
Some affiliates are in red. You may think the amount very small compared to the 1st quarter of FY2002, but in that quarter the amount was very high, especially in overseas affiliates.
Q8. How were sales of PCs and mobile phones in the 1st quarter?
We do not disclose quarterly volumes, but usually a little less than half of planned annual sales are in the first half. In the first quarter, sales volume was a little more than expected, and we do not change our annual sales projection. Sales of mobile phones were good, especially in Japan, and we see no need to review our annual sales plan.
Q9. What is your PC inventory?
Two to three weeks. It depends on area and timing, but now it is close to 3 weeks.
Q10. How has price erosion affected your PC sales?
In the 1st quarter, YoY sales were down JPY 18 billion. The impact of price erosion was JPY 30 billion (-20%). Sales grew 10% (JPY 12 billion) by volume. Our average sales price now is about JPY 160,000.
Q11. How did semiconductor business profitability look in the past quarter?
Profitability is positive and above budget.
Q12. What is the current and short-term status of NAND flash memories?
Demand, especially for high density memory cards, has been very strong. In the 2nd quarter, demand remains very healthy for SD cards for digital still cameras, USB memories for the US market and MCPs for mobile phones. Prices have been stable due to the tight supply situation.
Q13. How much have NAND flash price lowered in the 1st quarter?
The market price has stayed above our expectation.
Q14. What is the main reason for better than expected LCD profitability? Is it due to improved production yields at your Singapore operation? Or to stronger demand for mobile phones?
Both. In Singapore, the improvement is not only in production yields, but from all kinds of efforts by employees and management. Demand for mobile phones remains very strong.
Q15. Toshiba is not following the PC market trend. Do you think you have to make decisive decisions in the PC business, based on your TVC criteria?
I agree. We cannot survive if we just continue as we did in the past. Management, including the President, has a sense of crisis and is studying what actions to take.
Q16. What is your capacity utilization rate in semiconductor manufacturing now? And how do you see the sales and profitability?
At or close to 100% for all discrete devices, system LSIs and memories. In the 2nd Quarter, we expect recovery in discrete devices demand for mobile phones and PCs in. Demand for custom LSIs is very strong, especially in the entertainment equipment market, and demand for CMOS sensors for mobile phones with cameras has been strong. In memories, there is healthy demand for NAND flash for digital still cameras and MCPs for mobile phones. We can expect only a gradual growth for the latter, due to inventory adjustment in China and Korea.
Q17. Was your semiconductor business affected by July's big earthquake in Tohoku?
We have a semiconductor production site close to the epicenter of the earthquake, but there was little impact.
Q18. How severe was price erosion in PCs?
In the US market, the YoY market price was 15% lower in May. It was especially marked in retail market, at US$250 a machine. In Europe, market prices were 20% lower, partly because of Euro appreciation. In Japan, we see no signs of price stabilization.
Q19. Do you plan to invest in large size LCDs for TV application?
We have been studying this, but not yet reached any conclusion.

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