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Sharp, NEC book profits but Hitachi swings to loss

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[October 30, 2008]  TOKYO (AP) -- Three more Japanese electronics companies -- Sharp, Hitachi and NEC Corp. -- blamed sluggish demand and the strong yen for mixed earnings results Thursday.

With the global financial crisis battering global markets, all three have slashed their forecasts within the last month for the fiscal year through March.

InsuranceSharp Corp.'s profit fell 35.3 percent to 28 billion yen ($284 million) for the six months to September, blaming gains in the yen and weak domestic demand for mobile phone handsets.

A strong yen hurts Japanese exporters by eroding their overseas earnings when converted back to yen. Sharp said it incurred 63.5 billion yen ($643 million) in foreign exchange losses during the six months.

Sharp's revenue dipped 4.8 percent year-on-year at 1.56 trillion yen ($15.8 billion) in the first half. The Osaka-based company did not give earnings reports in the July-September quarter.

Hitachi Ltd. swung to a loss of 17.4 billion yen ($167 million) for the quarter from a profit the year before. It said soaring raw materials costs and slack demand hurt its automotive systems and semiconductors businesses. Sales slumped sharply in Europe and the United States. It had reported a net profit of 558 million yen in the same period last year.

Hitachi also lowered its profit forecast for the fiscal year ending March to 15 billion yen ($146 million) from 40 billion yen. Sales were projected at 10.9 trillion yen ($105.8 billion), down 3 percent from last year.


"We slashed our projections as we expect our business environment, including the foreign exchange and stock markets, will continue to be difficult," said Hitachi spokesman Atsushi Konno. "Of course we would like to see stronger profit, but we still think financial markets are quite unpredictable."

Hitachi's sales were flat in electronic devices and power and industrial systems, while they declined in digital media products. Financial services sales slumped 14 percent compared to the same period last year.

The news was a bit better for NEC, which reported a profit of 1.3 billion yen ($13 million) for the fiscal second quarter compared with a 5.8 billion yen loss in the same period last year, when it booked special losses for faulty products.

NEC said sales of large computer network systems to domestic telecoms companies fell, while revenue from abroad was hurt by the stronger yen. It also cited lower sales of personal computers and semiconductors.

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Overall revenue for the quarter was flat at 1.12 trillion yen ($11 billion), with operating profit falling due to higher sales costs and operating expenses.

Last week, NEC cut its full-year earnings estimates, blaming weaker demand for mobile phones and computer chips. The company cut net profit by 57 percent to 15 billion yen on projected sales of 4.6 trillion yen.

Sharp, a leading maker of flat-panel TVs, said its global sales of liquid crystal display flat-panel TVs jumped 28 percent year-on-year to 4.78 million units during the period due to steady demand at home and abroad.

But its mobile phone handset sales fell by a third to 5.42 million units during the six months. The bulk of its sales come from Japan.

Earlier this month, Sharp downgraded its net profit projection to 60 billion yen ($608 million), down 41 percent from the previous year, with sales expected at 3.42 trillion yen ($34.6 billion).

[Associated Press; By MARI YAMAGUCHI]

Associated Press writers Shino Yuasa, Joe Coleman and Jay Alabaster contributed to this report.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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