Japanese electronics giant Toshiba Corporation said that it will cut an additional 3,900 temporary jobs by next March as it expects exceed its previously forecast net loss of 350 billion yen ($3.5 billion) for the financial year that ended last month.
The world's second biggest maker of NAND-type flash memory after Samsung Electronics said in a preliminary earnings statement that the downward revision from its earlier estimate of a 280-billon-yen loss was due to the price crash in the global semiconductor market and tax credit related costs.
The Tokyo-based company widened its net loss estimate by 25 per cent to 350 billion yen ($3.5 billion) after taking into account 85-billion yen in deferred tax assets, cutting its shareholder's equity ratio of a year ago to 8.2 per cent.
After reporting a net profit of $127.4 billion in the last business year, this years expected net loss would be the biggest ever loss in the company's history.
Toshiba denied in a statement that it was seeking to increase its capital by $5 billion as reported by Japan's Nikkei that the electronics ghiant may raise 300 billion yen by selling common stock and 200 billion yen through the sale of bonds.
Slumping demand and excess capacity have caused semiconductor prices to plunge, pushing makers of PC-use DRAM chips in particular to seek help, and sending Toshiba's chip business into the red in the first half of the business year.
Global recession and lesser consumer spending are ''particularly notable in NAND flash memories, where decreased demand for applications such as memory cards and MP3 music players has generated excess supply.
Releasing its annual semiconductor market analysis report this month, technology market researcher firm Gartner, said, ''The global recession continues to batter the worldwide semiconductor industry, whose sales fell 5.4 per cent to $255 billion in 2008, a decrease of $14.5 billion from 2007 revenue, due to the steep decline in the market in the final quarter of 2008 and could face far worse declines in the current year.'' (See: Global semiconductor sales fall 5.4 per cent)
Toshiba, which ranked third in Gartner's market analysis report for 2008, saw its revenue decrease 10.3 per cent, largely because its application-specific integrated circuit (ASICs) and application-specific standard products (ASSPs) for consumer, wireless and automotive electronics showed mild growth in early 2008.
The Japanese government is understood to be bringing out legislation, where companies suffering from the global economic downturn can apply for public funds. The Japanese government is mulling injecting public funds into struggling Japanese chip maker Elpida Memory, which had proposed forming a partnership with Taiwan Memory Company. (See: Government-backed Taiwan Memory Company ties up with Japan's Elpida Memory)
Last month, Toshiba said that it would name Norio Saskai as new company president in June, becoming the latest Japanese electronics conglomerate to reshuffle top management betting that a change will help reverse its flagging fortunes. (See: Toshiba follows Sony and Hitachi in reshuffling top management)
This new round of lay-off comes after Toshiba announced in January a business improvement plan that included the cutting of 4,500 contract workers mainly for the semiconductor division after their contracts ended in March.
The current recession has forced many Japanese companies to restructure and save costs by reducing their staff strength and on Friday, the joint venture mobile company of Sony Ericsson said that it would cut an additional 2,000 jobs cope with the falling demand for mobile handsets.