Toshiba America, Inc.

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Toshiba America, Inc.

founded: 1875

Contact Information:

headquarters: 1251 avenue of the americas, ste. 4100
new york, ny 10020 phone: (212)596-0600 fax: (212)593-3875 url: http://www.toshiba.com

OVERVIEW

Toshiba America, Inc. is the holding company for one of the nation's leading groups of high technology companies and a subsidiary of the $44-billion Toshiba Corporation, with 303 consolidated subsidiaries worldwide. Toshiba Corp. oversees five operating companies that together span a diversified range of modern electronics, each conducting research and development, manufacturing, sales, and service in its field of expertise. The Toshiba America Group specializes in advanced electronics and is a recognized leader in products that enhance the home, office, industry, and health care environments. The company markets and manufactures information and communication systems, electronic components, heavy electrical apparatus, consumer products, and medical diagnostic imaging equipment. For the year ending March 31, 1997, sales in the United States were up by 27 percent. Furthermore, Toshiba's share of the North American portable PC market rose to about 24 percent.

COMPANY FINANCES

According to its 1997 annual report, Toshiba Corp.'s net sales increased in the fiscal year ended March 31, 1997 by 7 percent. This growth was driven by strength in personal computers and peripherals. However, because of the depreciation of the yen during that period, along with lower sales in nuclear power station equipment and a drop in semiconductor memory prices, operating income decreased 30 percent and net income declined 26 percent. Sales for 1997 worldwide totaled nearly $44 million and net income was $541 million.

HISTORY

The Toshiba Corporation began in 1875 under the name Tanaka Seizo-sho (Tanaka Engineering Works), Japan's first manufacturer of telegraphic equipment. The company expanded into heavy electrical apparatus and incandescent lamps and consumer products. In 1899, it was renamed Tokyo Denki (Tokyo Electric Co.), and in 1939, merged with Shibaura Seisaku-sho (Shibauro Engineering Works), becoming Tokyo Shibauror Denki, or "Toshiba" for short. In 1978, Toshiba became the company's official name.

Toshiba Corporation established American operations in 1965 through the incorporation of Toshiba America, Inc. By 1989, Toshiba America had achieved its current structure of five separate operating companies marketing a variety of diversified electronics and high technology products. However, Toshiba America has not always been a billion-dollar company. Prior to 1994 when the company was concentrating on low-end VCRs; certain television screen sizes, 13-inch to 27-inch; small audio goods; and microwave ovens, its products were referred to as promotional products. They were sold primarily through department stores, especially through Macy's Department Stores and The May Company. Even though it had varied distribution of its products, a shift in the category mix was inevitable if the company hoped to remain in the consumer electronics business in the United States.

As the 1980s waned, out went the small audio equipment and microwave ovens and in came the more sophisticated products, such as the company's original FST SuperTube TVs, as well as a line of high-end VCRs. Toshiba felt that some of the businesses it was in simply were not making any money. In other words, the smaller, portable products did not provide good margins. The company, in effect, had to import many components from Japan, but the key factor in turning the company around was the establishment of its Horseheads, New York, tube manufacturing plant. It was begun as a joint venture with Westinghouse, but the plant became the sole province of Toshiba in 1987. Thus, this partnership resulted in a steady supply of products along with better pricing.

STRATEGY

Toshiba has entered into numerous joint ventures as part of the company's overall strategy. The company's business partners include: IBM, Motorola, Intel, Texas Instruments, National Semiconductor, General Electric, RCA, Apple, MIPS Computer, International Fuel Cells, Time Warner, Siemens, and Philips. By establishing close relationships with major industry leaders, Toshiba has remained in the forefront of technological developments and benefited from having an early presence in emerging markets. Therefore, Toshiba is exposed to broad market competition. Nevertheless, the company's ability to compete in open markets is demonstrated by the number of its products that are ranked in the top five for market share.

Toshiba has long been known as a world class manufacturer but did not rate nearly as well in the area of marketing. Consequently, in 1993 the company entered into a long term sponsorship of San Diego's La Costa Women's Professional Event, now called the Toshiba Tennis Classic, putting the company on Television for the first time in five years with a series of highly-visible commercials.

FAST FACTS: About Toshiba America, Inc.

Ownership: Toshiba America, Inc. is a subsidiary of Toshiba Corporation, a publicly owned company traded OTC (over-the-counter).

Ticker symbol: TOSBF

Officers: Shunicki Yamashits, Chmn. & Pres.; Atsutoshi Nishida, Vice Chmn. & Pres., Toshiba American Information Systems

Employees: 186,000

Principal Subsidiary Companies: Toshiba America, Inc. is a fully owned subsidiary of Toshiba Corporation.

Chief Competitors: Toshiba is a manufacturer of information and communications systems, information media, and communication products, power systems, industrial equipment, and electronic components. Its major competitors include: Hitachi, Ltd.; Sony Corporation; Mitsubishi Electric Corporation; Pioneer Electronics Corporation; Philips Electronics NV.; Thomson Multimedia; Matsushita Electric Industrial Co. Ltd.; IBM; and NEC.

Toshiba's initial overall strategy had been to focus on separate, individual operating companies to manufacture and market its diversified product line. Toshiba America has several operating companies located throughout the United States. Toshiba America Information Systems, Inc. (TAIS) in Irvine, California, makes printed circuit boards and laptop and notebook PCs. In Mitchell, South Dakota, it manufactures toner for photocopiers; Toshiba America Medical Systems, Inc. (TAMS) produces MRI (Magnetic Resonance Imaging) systems at its facility in south San Francisco and magnets for medical systems in San Diego, California. Toshiba America Electronics Components, Inc. (TAEC) manufactures semiconductors at its Microelectronics Center in Sunnyvale, California; Toshiba Display Devices Inc., which is TAEC's subsidiary is located in Horseheads, New York, and produces various sizes of color television tubes. Toshiba America Consumer Products, Inc. (TACP) manufactures color television sets at its plant in Lebanon, Tennessee, and television chassis at its facility in Juarez, Mexico. A joint venture between Toshiba and IBM/Dominion Semiconductor L.L.C. in Manassas, Virginia, is manufacturing advanced semiconductor memory chips.

INFLUENCES

Toshiba introduced its own digital satellite system (DSS) in an attempt to keep up with its competition. The company's version of the small-dish television system was accompanied by optional accessories, including a space-saving antenna to get local programming and a device that saves having to drill a hole for the antenna wire. Toshiba was the fourth supplier to enter the DDS market, following Thomson Consumer Electronics, Sony Electronics, and Hughes Network Systems. The company works with satellite dealers and consumer electronics retailers in order to promote its DSS products.

Toshiba has maintained a strong brand franchise in consumer electronics outlets, and has capatilized on it. In addition, Toshiba has enjoyed strong brand recognition in the satellite market as a long-time maker of equipment for C-band, the large dish satellite Television system. There it has established a reputation for quality products, which company executives played up as well. Toshiba looked at what its competitors were doing and at the kinds of questions consumers were asking, such as, "How do I enjoy my DSS and also my local affiliates?" Everyone Toshiba talked to said they wanted local service, so the company looked at that as a potential weakness of its competitors.

In November 1996, Toshiba made history as the first company to introduce a DVD-ROM drive. Toshiba's role in bringing DVD, or Digital Versatile Disc software to market goes beyond developing the core technology. DVD provides enormous digital storage space with exceptional picture and theater-quality Dolby Digital Surround sound. Early in the venture, Toshiba gathered support for this technology, and in 1995, formed a strategic alliance with Time-Warner, uniting its entertainment expertise with Toshiba's electronic ingenuity. Also in 1995, Toshiba joined with eight other companies to create a standard for the emerging technology, and in 1996, led the way to finalize. Toshiba then went on to rally international companies from a range of industries to adopt the best SD technology and the competing MMCD technology to create a single technology, DVD. In the late 1990s, DVD emerged to meet the needs of the computer industry and Hollywood's movie studios.

CHRONOLOGY: Key Dates for Toshiba Corp.

1875:: Tanaka Seizo-sho company is established as a manufacturer of telegraphic equipment
1893:: Tanaka changes its name to Shibaura Swisakusho Works and begins manufacturing steam engines
1899:: Tokyo Denki is founded as a manufacturer of incandescent lamps
1939:: Shibaura and Tokyo Electric Company, Ltd. merge to form Tokyo Shibaura Denki, or Toshiba for short
1949:: Toshiba goes public
1952:: Produces Japan's first broadcasting equipment
1954:: Launches a line of digital computers
1965:: Toshiba America, Inc. is established
1978:: The official company name becomes Toshiba Corporation
1986:: AT&T and Toshiba sign an agreement to market Toshiba's voice recognition systems throughout Japan
1987:: A subsidiary half owned by Toshiba breaks international laws by selling submarine sound-deadening equipment to the Soviet Union
1991:: Westinghouse forms a joint venture with Toshiba to assist in the development of large home appliances
1996:: Toshiba is the first company to introduce a DVD-ROM drive for computers
1998:: Toshiba is the first company to introduce an all-digital, flat panel LCD monitor

CURRENT TRENDS

According to Toshiba, the DVD player market is in the initial stages of growth and is expected to reach 10.3 million units by the year 2000. Also, the number of PCs that will have a DVD drive is expected to reach 24.9 million units by the year 2000.

The Computer Systems Division of Toshiba America Information Systems continues to dominate the notebook market in the United States, according to the latest research findings reported by the International Data Corporation. Toshiba has consistently led the industry as the number one vendor in both the dealer and retail channels for more than three years, with its popular Tecra, Portege, Satellite Pro, and Satellite notebook product lines. Toshiba ships more portables in the United States than Compaq and IBM combined. Thus, the company will continue to invest in manufacturing in an attempt to double its output every six months.

PRODUCTS

In March 1998, Toshiba was the first to introduce an all-digital, flat panel LCD monitor, the TekBright 50D, which features a 15-inch portrait, or landscape-adjustable screen. In 1997, the company introduced several notebooks and mini-notebooks, including a Windows 95-based Pentium unit weighing less than two pounds. Its pocket-size notebook, the Libretto 50CT, was designed for travelers and distributed through specialty chains, including CompUSA. By March 1998, the Libretto was selling at prices below $1,000, a first in the mini-notebook category, according to the company.

The Information Systems Division added two new models to its Equium business desktop personal computer line in 1997. The Equium 5230D and the The Equium 6230D became available in September 1997. In 1997, Toshiba, along with IBM, Sony, and NEC, introduced a 233 MHz MMX and, in 1998, Toshiba introduced the Satellite 335/330 series notebooks with Intel 266 MHz Pentium processors and a broad combination of features and value.

CORPORATE CITIZENSHIP

Toshiba not only stresses the importance of communication and cooperation between industry and community, but tries to set an example by becoming involved in a number of community concerns and civic organizations. The company sets an annual donation budget, allotting approximately one-half of the budget to education needs and approximately one-fourth each to social welfare, the arts, and cultural interests. This budget is adjusted from year to year, and employees are encouraged, through information published within the company, to support their personal interests through donations.

The Toshiba America Foundation, created in 1990, is a private, endowed, not-for-profit grantmaking organization. The foundation is dedicated to supporting science and mathematics education programs, projects, and activities in the United States. The giving program focuses on middle and high schools, with special emphasis on enhancing participation by women and minorities. In addition, Toshiba works with the National Teachers Association to co-sponsor the world's largest science competition for K-12 students. The company invests more than $1 million annually in the program. The community initiatives include the Joint Community Relations Council (JCRC), comprised of executives from the three Southern California Toshiba America operating companies, with focus on charitable efforts within the communities in which Toshiba conducts business.

GLOBAL PRESENCE

According to its 1997 annual report, Toshiba is "now competing in a marketplace without borders. Future success is dependent on the ability to be among the first to become competitive on a global scale." In addition, the company is "fostering a corporate culture that places value on speed, and on maintaining a borderless organization able to make that speed possible."

The company recognizes the importance of being able to compete globally, and has realigned operations to meet that goal. In 1998, it allocated resources accordingly, to what it considered high growth areas, mainstream business, or emerging business.

One of its most important mainstream categories is consumer products. As an International Fortune 500 company in the late 1990s, Toshiba's Information Systems Inc. Division is the twenty-seventh largest company in the world in terms of sales. Toshiba's facility in Lebanon, Tennessee, was originally built to manufacture consumer televisions in 1978. Today, the facility has sister production facilities in Japan, Singapore, Thailand, and the United Kingdom. The company continues to increase its share of the U.S. and international consumer television market. Toshiba supplies televisions not only to the United States, but also to Canada, Mexico, and South America. It has also contributed to Tennessee's position as one of the nation's leading exporting states.

Another important category, heavy electrical apparatus, is a critical means for the company to improve the basic infrastructure of emerging nations, which should, in turn, create new markets for consumer products. By supplying electrical generating systems and nuclear power plant equipment to developing nations, Toshiba hopes to improve social infrastructures for large groups of people while assuring a place for its products in the future, according to its 1997 annual report.

The Toshiba International Corporation offers a comprehensive range of high quality industrial products to the overseas markets. The company maintains a manufacturing facility in Houston, Texas, and exports products to Canada, Mexico, Central and South America, Japan, Australia, and Europe.

SOURCES OF INFORMATION

Bibliography

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