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Mitsubishi Electric hit by IT slump

Mitsubishi Electric, one of Japan's major electronics and semiconductor makers, barely managed to stay in profit in the first half of the current fiscal year.

Group net income for the half-year was 1.6bn yen (£9.2m), down 98% from the same period a year earlier, and group net sales were 1.8 trillion yen, a fall of 7%.

Sales in all of the company's product divisions, barring household appliances, were down on the first half of the previous year and none dropped more than Mitsubishi Electric's electronic devices sector. That division, which includes the company's semiconductor operations, saw sales drop 25% to 261.7bn yen.

The information and communications division, one of the bright spots a year earlier, reported a 10% drop in sales to 390bn yen.

Mitsubishi Electric attributed the drops, and subsequent operating losses in the electronic devices and information and communications divisions, to a sudden and extreme downturn in IT-related demand.

Looking ahead, Mitsubishi Electric had nothing but bad news to offer. Blaming the unstable global economy, the company said:

"There is an increased possibility for a delayed recovery in IT-related demand and it is estimated the managerial environment for Mitsubishi Electric will become even more severe."

In response, the company revised down its full-year forecast and now expects to post group net sales of 3.9 trillion yen, which would represent a 6% drop on last year, and a group net income of 2bn yen, a drop of 98% on the previous year.

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