2011 Thai Floods Leave a Big Financial Gash

{complink 2149|Fujitsu Ltd.} and {complink 5648|Toshiba Corp.} 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.

6 comments on “2011 Thai Floods Leave a Big Financial Gash

  1. Barbara Jorgensen
    February 1, 2012

    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.

  2. DataCrunch
    February 1, 2012

    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.  

  3. Daniel
    February 2, 2012

    I think the Thailand flood impacts are more than Japans Tsunami impact in supply chain. I think in coming days more and more companies may come up with similar news lines.

  4. Barbara Jorgensen
    February 3, 2012

    @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

  5. JADEN
    February 7, 2012

    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.

  6. t.alex
    February 8, 2012

    I think the Thai flooding may be just part of the reasons. There might be other factors that affect the quarter result as well.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.