The Wall Street Journal-20080130-Toshiba-s Profit Rises 11-- While NEC Posts Loss

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Toshiba's Profit Rises 11%, While NEC Posts Loss

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TOKYO -- Toshiba Corp. reported an 11% jump in net profit for its fiscal third quarter, while NEC Corp. swung to a loss as both Japanese electronics conglomerates reported weakness in their core businesses.

Toshiba, whose products include notebook computers, flat-screen television sets and memory chips, said group net profit rose to 80.51 billion yen ($753.4 million) in the quarter ended Dec. 31 from 72.43 billion yen a year earlier. The latest results were boosted by a gain of 130 billion yen on the sale of a building and land in Tokyo's Ginza district.

Operating profit slumped 25% to 42.06 billion yen as margins were squeezed from weak chip prices, even as revenue increased 5% to 1.879 trillion yen from 1.793 trillion yen.

Toshiba left unchanged its outlook for the year through March. It predicts group net profit of 180 billion yen, operating profit of 290 billion yen and sales of 7.8 trillion yen.

NEC said it swung to a net loss during the quarter through December as operating expenses increased and profit fell at its core software and networks division. The company booked a net loss of 5.23 billion yen in its fiscal third quarter, compared with net profit of 2.62 billion yen a year earlier.

Revenue slipped to 1.05 trillion yen from 1.-1 trillion yen.

NEC wants to shift its focus away from the ultracompetitive consumer-electronics sector and toward its larger network- infrastructure and information-technology business, which makes up about half of the company's revenue. The operation includes large computer systems for financial institutions and mobile-network equipment for cellular operators.

Profit in those areas plummeted almost 70%, largely because of a drop in orders for cellular infrastructure. But the company still expects that a turnaround in the current quarter, which ends in March, will help NEC reach its fiscal-year targets -- net profit of 30 billion yen on sales of 4.7 trillion yen.

The company's semiconductor operations are gradually recovering as its chip subsidiary, NEC Electronics Corp., slowly regains its financial health. NEC Electronics, whose clients include Nintendo Co. and Toyota Motor Corp., said Monday that it expects to break even for the second half and reach its goal of an operating profit in the current fiscal year as it steps up efforts to cut costs at its production lines.

Toshiba's results are based on U.S. accounting standards, while NEC uses Japanese standards.