Japan's Toshiba Corp. said Friday it expected to go in to the red for the first half of the financial year as its computer chip business is hit by lower prices and weak demand.
Toshiba also said a slowdown in the global economy and the turmoil in financial markets would dent the performance of the company, which has enjoyed bumper profits in recent years.
Toshiba said it now forecast a net loss of 50 billion yen (468 million dollars) in the six months to September, compared with a previous expectation of a 15 billion yen profit.
It would be a sharp fall from the net profit of 45.7 billion yen Toshiba posted in the same period a year ago.
"We apologise that the company has to greatly lower the business forecast concerning shareholders," Toshiba vice president Fumio Muraoka told a news conference.
"The main reason for the forecast revision is the deteriorating performance of semiconductor business, especially due to the falling prices of NAND flash memory and dwindling sales of system LSI," he said.
NAND flash memory chips are used in portable music players and other electronic devices while system LSI is mainly installed in products such as DVD recorders and digital cameras.
Toshiba has also reeled from the failure of its next-generation DVD format, which lost out to Sony-led Blu-ray in a battle to set the next standard.
Toshiba runs diverse businesses including US nuclear power plant Westinghouse Electric, which it bought in a multibillion-dollar deal in 2006.
On an operating level, Toshiba slashed its half-year forecast from a profit of 70 billion yen to a loss of 30 billion yen, with sales projected at 3.55 trillion yen, down from an earlier forecast of 3.80 billion yen.
Muraoka said the prospects for the global economy were grim as the financial crisis, renewed by the collapse of US investment bank Lehman Brothers, would cool consumer sentiment further.
"Once the finance sector, which is the blood flow of an economy, stops functioning normally, it would inevitably affect consumption, employment and corporate investment," he said.
Toshiba said the downturn would continue into the second half.
For the full year, Toshiba said it expected net profit to drop by nearly half to 70 billion yen from an earlier forecast of 130 billion yen.
It also nearly halved its forecast for operating profit to 150 billion yen from 290 billion yen.
Sales are expected to total 7.7 trillion yen, falling short of the initial projection of 8.0 trillion yen.
Source: AFP Global Edition