Toshiba up on chips, power systems, lifts outlook

TOKYO (Reuters) - Japanese electronics group Toshiba Corp (6502.T) posted a 38 percent rise in quarterly operating profit on Monday, thanks to sales of its flash memory chips and thermal power plants, and it raised its full-year outlook closer to market estimates.

The world's No.2 maker of NAND flash memory chips after South Korea's Samsung Electronics Co Ltd (005930.KS) has so far benefited from solid demand and prices for flash memory and its system chips, used by clients such as Apple Inc (AAPL.O) and Nokia (NOK1V.HE) in their digital music players and cellphones.

Toshiba expects its NAND prices to fall 20 percent in October-December from end-September for an annualized 40 percent price fall, in line with its previous estimate for a 50 percent decline, Executive Vice President Fumio Muraoka told reporters.

The nuclear reactors-to-washing machines conglomerate lifted its full-year outlook, forecasting an operating profit of 290 billion yen ($2.54 billion).

Ahead of the results, 15 analysts polled by Reuters had been expecting Toshiba, which also competes with General Electric (GE.N) in nuclear reactors, to make a full-year operating profit of 302 billion yen.

But Toshiba's liquid crystal display business deepened losses made in April-June as prices of mobile phone displays plunged. Its Regza-brand flat TVs were also hit by price competition in Europe and the United States, Muraoka said.

"We aim to break even in both these businesses by the end of the business year," he said at a news conference.

Toshiba said it earned an operating profit of 61.34 billion yen ($537.2 million) in July-September, helped by sales at its newly-acquired U.S. nuclear power unit Westinghouse and sales of thermal power and medical systems.

Toshiba, which has been trimming its operations to focus on its core semiconductor and nuclear power businesses, plans to build a new plant by 2009 to build NAND chips, used for data storage in portable gadgets. It also plans to buy microchip production lines from Sony Corp (6758.T) to expand its lineup of logic chips.

Shares of Toshiba have gained 27 percent since the start of the year, as NAND chip price falls eased and unit Westinghouse won orders to build nuclear plants in China and the United States. The benchmark Nikkei average .N225 shed 3 percent in the same period.

Prior to the announcement, Toshiba shares closed up 3.4 percent, while the benchmark Nikkei rose 1.2 percent.