Elpida slashes FY2004 income forecast
Cash set aside against possible DoJ price-fix probe fines
Elpida has warned that its FY2004 income will fall below its previous expectations on the back of a drop in sales - and the decision to set aside funds against possible fines for its alleged participation in a price-fixing cartel.
The Japanese memory chip maker said on 24 January that full-year sales would total ¥211-214bn ($1.94-1.97bn), generating net income of ¥12-16bn ($110.48-147.30m).
Today, however, the company revised those figures to ¥207bn ($1.91bn) and ¥8.1bn ($74.57m), respectively. That amounts to shortfalls of 1.9-3.3 per cent and 32.5-50.6 per cent, respectively.
The revision still leaves Elpida well up on FY2003, when it lost ¥26.9bn ($247.65m) on sales of ¥100.4bn ($924.32m).
Elpida said it had needed to make the revision on falling DRAM prices in the PC and server segments, and weaker than anticipated demand in the consumer electronics and mobile phone markets.
It also said it was ring-fencing ¥1.9bn ($17.49m) in case the US Department of Justice finds the company guilty of participating in a price-fixing cartel. The admission follows fellow memory maker Hynix's decision to set aside KRW347bn ($341m) for similar reasons. Last December, Samsung said it was reserving $100m in case it, too, receives a fine.
All three companies have been investigated by DoJ officials exploring allegations that memory companies colluded to maintain DRAM pricing levels. Micron has already coughed to its participation, blaming it on the actions of individual executives rather than company policy. Its move to admit its culpability and to co-operate with the Feds appears to have saved it a hefty fine. Not so Infineon, which last August was fined a record $160m.
Elpida said it was "co-operating with the DoJ in its investigation". It will report its FY2004 results on 25 April. ®