Toshiba Corp is set to cut its workforce by roughly 5,000 jobs as the Japanese semiconductor and electronics giant looks to cut costs amid a worsening financial outlook. The company will also forego an interim dividend payment to shareholders for the first time in about 50 years. The job cuts will leave Toshiba with about 58,600 staff and should be completed by the end of the current fiscal year in March. Some executive salaries will also be cut by more than initially expected, the company said.
Toshiba announced the moves Monday, citing poor conditions in the semiconductor market that would lead it to a consolidated net loss of 15bn yen ($139m) for the year on group revenue of 5.67 trillion yen ($55bn). Pre-tax loss for the year is expected to be 10bn yen ($93m). Previously, the company had been projecting a group net profit of 25 billion yen ($231m) and a pretax profit of 40bn yen on sales of 5.7 trillion yen.
Toshiba says the downturn in fortunes is largely due to weaker- than-expected prices for 64- and 128-megabit memory chips and a decline in profits from logic and system LSI chips, as well as the closure of aging production facilities and inventory reduction. Another factor hurting the bottom line is the estimated $100m-plus cost of exiting the Tohoku Semiconductor Corp joint venture with Motorola Corp (see related story). Some of that cost will be taken as a one-time charge in the company’s interim earnings report. For the fiscal first half ending September 30, Toshiba now expects to post a pre-tax loss of 50bn yen ($462m).
Looking ahead, Toshiba expects a DRAM prices to improve during the second half and reckons it will see a 50bn yen operating profit in its semiconductor business next fiscal year. The company also insists that its other main businesses, including PCs, liquid crystal displays and home electronics are doing well.
