Fujitsu Ltd. (Tokyo: 6702; London: FUJ; OTC: FJTSY) and Toshiba Corp. (Tokyo: 6502) are the latest to get banged about as a result of the flooding in Thailand that disrupted the production of hard disk drives last year. Both companies warned in statements released earlier this week that they won't meet their forecasts for the fiscal quarter and year ending March 31.
The two companies attributed the shortfall in revenue to procurement problems. In Fujitsu's statement, the company noted sales for fiscal 2012 would be 1 percent below its previous forecast. Sales would also be slightly below the fiscal 2010 numbers, the company said. It added:
Sales of PCs, car audio and navigation systems, and LSI devices have been revised downward due to delays in procuring certain parts and customer production adjustments due to the flooding in Thailand. In addition, the downward revision in net sales also reflects lower sales of services and server-related products because of delays in the recovery of ICT spending inside and outside Japan, as well as lower demand for LSI devices and electronic components.
Toshiba's story was similar, although the shortfall in projected revenue is much wider than at Fujitsu. The company expects revenue for the fiscal year ending March 31 to be as much as 11 percent below the prior forecast. Revenue for fiscal 2011, Toshiba said, would now be approximately $81.3 billion (6,200 billion yen), below the prior estimate of $91.8 billion (7,000 billion yen) and about $84 billion (6,398.5 billion yen) for fiscal 2010. The hardest hit business divisions include electronics devices and digital products. Toshiba oulined the reasons in its statement:
Businesses of Toshiba Group have been influenced greatly by changes in the business environment, including the progress of sharp yen appreciation, the impact of the flooding in Thailand and deterioration in markets due to financial uncertainty in some European countries.
These are the first two companies to indicate how big a dent natural disasters and global economic weakness in Asia and Europe will put on the electronics market. As other companies roll out December quarter results and later results for the first quarter of this year, it will become even more obvious how well the industry was prepared for these occurrences and how much of an impact they will have on performance the rest of this year.
Not only Fujitsu and Thosiba have indicated the shortfall in their revenue projection as a result of 2011 Thailand's flood, Nvidia the Graphic Processor manufacturer has lowered its revenue forcast too. The shortage of HDD has impacted many in technology business.
@Dave--i agree, just about everyone is hurting. However, companies trying to procure smaller volume of HDDs are more likely to snag them: for one thing, they will probably pay a higher price becuase volume customers look for big discounts. The laws of supply and demand may be hurting the big guys for the first time in a long time
On a positive note for Toshiba and Fuji, it seems that based on the article that there is demand for HDD, if only they can procure the materials.Which would lead me to believe that other competitors are also feeling the pain.
For once, analysts and companies themselves called it right--the effects of the flood are being felt more now (in the supply chain) than during the actual disaster. Althoguh distributors Arrow and Avnet don't do a lot of business in HDDs, they benefited from increased demand and higher prices in HDDs in their most recent quarters. The fact that OEMs such as Toshiba aren't going to hit their projections indicates that HDD-direct customers are hurting. From the tenor of the analyst calls, it will be another quarter before HDDs, at least, beging to recover.
By moving to the core of the industry and offerings services that keep the system humming, a group within the electronics market has rendered irrelevant the question of ownership and control of the supply chain.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.