By Makiko Yamazaki | TOKYO
TOKYO Japanese conglomerate Toshiba Corp swung to an operating profit in the July-September quarter, driven by strong demand for NAND flash memory chips from Chinese smartphone makers.
That boom in demand has been a blessing for Toshiba, which is seeking to recover from a $1.3 billion accounting scandal by turning itself into a company more focused on chips, nuclear energy and social infrastructure while getting rid of unprofitable businesses.
Toshiba posted an operating profit of 76.7 billion yen ($721 million) for the second quarter, versus a loss of 82.6 billion yen in the same period a year earlier. The result was roughly in line with a revised forecast announced in late October.
Toshiba revised up its annual outlook by 50 percent earlier this week and now expects 180 billion yen in profit, a turnaround from a 708.74 billion yen loss in the previous year.
In addition to robust orders from Chinese smartphone vendors eager to upgrade their devices with memory chips with larger storage capacity, Toshiba is receiving an additional boost from Apple Inc’s iPhone 7.
An advanced Toshiba flash memory chip with a three-dimensional stacked cell structure is being used in a high-end model of the latest iPhone, analysts have said.
Toshiba forecasts its chips and devices division will be its the largest profit contributor, generating an operating profit of 130 billion yen this financial year.
But analysts have also said that Toshiba’s depleted capital base in the wake of the scandal could limit its ability to make the necessary investments crucial to staying competitive in the global chip industry.
Toshiba had a NAND flash market share of 19.4 percent in 2015, ranking second after Samsung Electronics Co which has a 30.8 percent share, according to research firm His.
($1 = 106.3600 yen)
(Reporting by Makiko Yamazaki; Editing by Edwina Gibbs)
Next In Global Coverage 3
UK’s Sainsbury’s sees tougher end to year after first half profit falls
LONDON British supermarket Sainsbury’s warned that higher staff wages and its price battle with rivals would mean a tougher end to the year after first half profit fell by 10 percent.
Viacom revenue misses expectations as ad sales fall
Viacom Inc, the owner of MTV, Comedy Central and Nickelodeon, reported lower-than-expected quarterly revenue on Wednesday, weighed down by a decline in domestic advertising sales and the absence of hits from its Paramount film studio.
Cipla Q2 profit falls as Europe, emerging markets suffer
MUMBAI Cipla Ltd, India’s fifth-largest drugmaker by sales, on Wednesday reported a 35 percent fall in quarterly profit, missing analysts’ estimates, mainly due to lower sales in the emerging markets and Europe.