Toshiba 1998 Annual Report Download - page 6

4. Toshiba Corporation Annual Report 1998
■ LCDs — Differentiating Toshiba With New Models
Prices of LCDs fell dram atically durin g th e secon d h alf of fiscal 1997. Toshiba’s LCD sales for th e
year were un ch anged at ¥115.0 billion . In fiscal 1998, we are projecting h igh er sales. Dem and is
expected to rise for use as mon itors an d in factory autom ation equipm ent. In troduction of our
unique low-temperature polysilicon TFT LCDs will also bolster sales. We are n ow sh ippin g
sam ples of these displays. Full-scale production will begin late in 1998. With a slim profile, light
weight, high resolution and low power consum ption , th ese displays are gain ing acceptance for
use in portable in form ation terminals. We expect deman d to con tinue to grow.
Restructuring and Alliances Lead to Higher Earnings
■ Consumer Products — More Rigorous Profit Management
A slum ping econ om y in Japan, Tosh iba’s prim ary m arket for consum er goods, has created an
extrem ely difficult situation for the con sum er products segment. In fiscal 1997, declines in sales
prices accelerated. Making the situation worse were h igher air con dition er inven tories due to
unseasonable weath er. Losses in creased as a result. However, decisive steps to realign operation s
created som e encouraging signs. VCR operation s returned to profitability in th e year’s second
half. We moved all VCR operation s to Sin gapore an d switched to production un der consign m en t.
In hom e applian ces, we differentiate ourselves by concen trating on developing h igh ly appealin g,
new m odels th at en hance con sum ers’ life styles. In air condition ers, which are plagued by high
inven tories, we are reducing lead tim es, parts inven tories and otherwise improving our produc-
tion system . Th e aim is to m atch production closely with dem and. Along with m any sim ilar
action s, these steps are expected to establish a base for profitable operation s.
■ Power & Industrial Systems — More Global Alliances
Custom ers in Japan account for about 90 percent of orders for our power generation system s. But
th e dom estic busin ess clim ate is tough . Dem and for n uclear power projects is down at th e sam e
tim e that utilities are cutting back on capital spen ding. We plan to offset th is by raisin g th e share
of overseas sales to 20 percen t. Com petition is, of course, inten se worldwide. To succeed, we
inten d to becom e m ore com petitive through alliances with powerful overseas partn ers. Gen eral
Electric Co. of the U.S. is on e exam ple. We have cooperated with th is com pany for m any years.
In May 1998, Tosh iba and Gen eral Electric form ed ven tures to produce steam turbin e blades.
Both com panies will transfer blade production to the n ew com pan ies. We h ave also agreed to
work together on next-gen eration 1,500°C com bin ed-cycle power systems on a global scale.
A New System for Managing Toshiba
For several years, Toshiba h as carefully examined the individual busin ess sectors th at are th e
nucleus of our stren gths. Success in each sector man dates com pliance with global stan dards. We
m ust becom e m ore com petitive. This process led us to an inescapable con clusion : Toshiba can no
longer rely on a un iform standard for m an agin g its diverse activities. Today’s m arkets are much
m ore dem andin g. Therefore, we are studyin g from all standpoints th e best structure for Tosh iba
to realize its potential. The division of Tosh iba into virtual intern al com panies or spin n ing off
busin ess un its under a holdin g com pan y are am ong th e option s we are con sidering.