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October 27, 1995

NEC, HITACHI, MITSUBISHI ELECTRIC, TOSHIBA ARE ALL LEARNING TO SMILE AGAIN

By CBR Staff Writer

Four of the Japanese computer majors reported their unconsolidated or parent company figures yesterday – the full consolidated figures should not be far behind – and all four saw strong first-half profit growth, with memory chips and mobile communications equipment leading the way. NEC Corp parent current profit – which includes gains and losses from gambling in the shares of other companies as well as results from operations, rose 51% to the equivalent of $305m. Hitachi Ltd said current profit in the six months rose 28% to $549m; Toshiba Corp reported a 31% rise to $323m and Mitsubishi Electric Corp saw a 39% jump to $374m. Current profit is struck pre-tax and as well as gains and losses on securities investments it includes results of any other non-operating activities as well as trading for the parent company, exclusing subsidiaries and affiliates. The rapacious world personal computer market, expected to total more than 50m machines this year, benefits all four as major memory chip makers, and their combined sales of semiconductors for the six months totalled $17,400m; they expect to do $36,300m for the year to March 31 in chips. All are putting in additional capacity to meet the demand they expect, with NEC investin $2,100m in new semiconductor plants, Hitachi $1,800m, Toshiba $1,600m and Mitsubishi Electric $1,150m as Yoshihiro Suzuki, NEC’s executive vice-president, forecasts that world annual personal computer sales will exceed 100m machines by the year 2000. Despite the personal computer boom, NEC says that its profits from the personal computer business fell in the first half of the current business year due to tough competition in the sector. It reckons that in the first half of the business year, domestic personal computer sales rose 22% to $3,500m while tough competition in the sector pushed down prices. NEC plans to raise overall planned capital investment in the year to end-March 1996 by $300m to $3,000m, with $2,100m going to the semiconductor business. The other aspect that is putting a smile on the faces of the Japanese electronics companies, big exporters all, is the dollar’s recovery back to around 100 yen, and the four majors now estimate the average dollar rate in the second half of the current fiscal at 90 to 95, against their original forecasts for the whole year of 85 to 90 – all of which boosts profits. NEC expects business to stay strong at least in the first half of next fiscal.

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