The news disappointed investors already alarmed by weak results from Fujitsu released Tuesday and helped to send Japanese share prices lower.

Toshiba Corp.'s net loss in the three months to June blew out to 36.8 billion yen (307 million dollars) against a year earlier loss of 18.8 billion yen, while its pre-tax loss widened to 50.9 billion yen from 33.3 billion yen.

Sales over the period fell 6.2 percent to 1.12 trillion yen.

The war in Iraq and outbreak of Severe Acute Respiratory Syndrome darkened business prospects in April-June.

"Sales of personal computers and televisions were worse than expected," said the firm's senior vice president, Sadazumi Ryu.

"In the domestic market we do not sell flat screen television sets and this has hurt our earnings," Ryu told a news conference.

A drop in the price of televisions in the United States also hurt profits.

In addition, "prices of our personal computers fell by roughly 20 percent. It was much larger than our earlier forecast," admitted Ryu, adding that Toshiba had launched a project team in May to deal with the slide in prices.

Revenue from digital products fell seven percent from the same period a year earlier due largely to a slump in demand from overseas for personal computers (PCs) and sluggish television set sales.

Toshiba's key electronic devices division also suffered a three percent drop in sales despite a seven billion yen rise in revenue from semiconductors because it span off its cathode-ray tube business into a joint venture firm.

Despite the weak figures, the firm held on to its full year earnings forecast made in April.

"We believe we can secure profits in the semiconductor area," said Ryu.

"We see the semiconductor market growing at a healthier rate and I also think the domestic PC market is starting to pick-up."

Demand for products such as elevators should also bolster overall results.

"We are seeing signs of improvement in various areas," he told reporters.

Toshiba expects net profit to March 2004 to more than double to 40 billion yen, with pre-tax profit forecast at 90 billion yen and sales at 5.7 trillion yen.

The weak results helped knock the Nikkei-225 average of the Tokyo Stock Exchange down 2.05 percent or 201.65 points to close at 9,632.66.

Toshiba ended the day down 8.37 percent or 42 yen at 460.

SPACE.WIRE