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Disco Falls Most Since 1999 Tokyo Listing After Cutting Profit Forecast

Disco Corp., Japan’s biggest maker of cutting tools for electronic equipment, fell the most in two years after cutting its full-year net forecast by 25 percent on sluggish investment in the semiconductor market.

The stock closed 14 percent lower at 4,510 yen on the Tokyo Stock Exchange, the largest one-day decline since Oct. 24, 2008. It earlier fell as much as 16 percent, its biggest intraday drop since listing on the bourse in December 1999.

Net income was 6.39 billion yen ($78 million) for the six months ended Sept. 30, compared with a loss of 95 million yen a year earlier, the company said yesterday in a statement to the exchange after markets closed. Disco cut its full-year profit forecast to 9.5 billion yen from 12.6 billion yen.

“This comes as a negative surprise,” Hisashi Moriyama, a Tokyo-based analyst for JPMorgan Chase & Co., wrote in a report dated today. He cited a slowdown of the European and U.S. economies and stiffer competition in the semiconductor dicer blades market for the downgrade.

Moriyama lowered Disco to “neutral” from “overweight”, a rating he had maintained since Aug. 11 last year, and cut the company’s nine-month share price estimate to 6,000 yen from 6,500 yen.

Tokyo-based Disco also cut its full-year operating profit forecast 23 percent to 14.5 billion yen, and its sales forecast by 4 percent to 98 billion yen.

Disco shares have fallen 22 percent this year, compared with a 6.7 percent decline in Japan’s benchmark Topix index.

To contact the reporter on this story: Adam Le in Osaka at ale14@bloomberg.net

To contact the editor responsible for this story: Drew Gibson at dgibson2@bloomberg.net

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