Toshiba 1998 Annual Report Download - page 4

2. Toshiba Corporation Annual Report 1998
In fiscal 1997, the year ended March 31, 1998, Toshiba’s consolidated net sales declined 1 percent to
¥5,458.5 billion (US$41,352 million). This chiefly reflects lower PC prices in North America, a deteriorating
market for semiconductor memory chips, and a decline in sales of consumer products due to sluggish
consumer spending in Japan. In addition to these factors, earnings were impacted by the Asian currency
crisis and a one-time increase in income taxes due to the revaluation of deferred tax assets and liabilities
resulting from the reduction in Japan’s corporate income tax rate. As a result, net income fell 89 percent
to ¥7.3 billion (US$56 million). Looking ahead, the operating climate will continue to be characterized
by intensifying mega-competition on a global scale. We are determined to improve our performance.
The key is becoming more competitive. To this end, we are channeling investments to the most promising
markets while taking dramatic steps to improve Toshiba Group’s management.
To Our Shareholders
Overview of Results by Business Segment
■ In form ation & com m un ication system s sales rose 2 percen t to ¥2,184.1 billion (US$16,546 million ).
Operating in com e, h owever, was down 69 percen t to ¥43.1 billion (US$326 million ) because of falling
PC prices in the United States.
■ Electronic devices & m aterials sales climbed 5 percent to ¥1,341.8 billion (US$10,165 million ).
Operating in com e surged 116 percent to ¥40.5 billion (US$306 m illion ). Wh ile weak m emory prices
hurt earn in gs, results benefited from strong perform an ces by discrete devices and logic ICs.
■ Power & in dustrial system s sales decreased 4 percent to ¥1,119.6 billion (US$8,482 m illion) and
operating in com e fell 48 percen t to ¥18.7 billion (US$141 million ). This is m ostly attributable to a down-
turn in work involvin g n uclear power plants and lower capital spen ding by Japan ’s electric utilities.
■ Con sum er products sales were down 10 percen t to ¥1,040.4 billion (US$7,882 m illion). Weak sales
an d lower prices of h om e applian ces along with growth in air con dition er in ventories caused th e
operating loss to increase to ¥45.3 billion (US$343 m illion).
■ In th e services & oth er segm en t, n ewly form ed in this fiscal year, sales in creased 13 percent to
¥420.0 billion (US$3,182 million ) an d operating in com e rose 34 percen t to ¥24.8 billion (US$188
m illion). This segm en t prim arily represents th e results of Toshiba Credit Corp., Tosh iba Building &
Lease Co., Ltd., Tosh iba Logistics Corp. an d other service-oriented subsidiaries.
Restoring a Competitive Edge in Strategic Markets
By pursuin g a policy of focus an d foresight, Toshiba h as been transform in g itself into an organ iza-
tion of specialized m an ufacturers, each h ighly com petitive in its respective market. The rapidly
growin g information and com m unication s field exem plifies this drive. By con cen tratin g investm en ts
here we have becom e:
• the world’s n um ber-on e supplier of notebook PCs;
• one of th e leading n am es in soph isticated m emory chips;
• a m ajor presence in sem iconductor categories oth er th an mem ories;
• a pion eer in th e developm ent of next-gen eration liquid crystal displays (LCDs).
Despite leadersh ip in man y high ly attractive m arkets, we h ave encoun tered com petition th at h as
inten sified at an unprecedented pace. To be a win ner, superior technology an d product quality as
well as a decisive cost advan tage are all im perative. Tosh iba seeks to generate con sisten t earnings
from th e growing markets that have un derpin n ed our perform an ce. In each market, th e key to
success is to gain a com petitive advan tage.