Nearly $1bn was wiped off of Casio Computer’s market capitalisation Friday as its stock plummeted to its lowest level in more than twenty years after the company forecast that its profits for the year will be far below the level analysts had forecast.

Shares of the world’s leading digital watchmaker plunged 16.5 per cent to Y2,025, the stock’s biggest daily percentage loss since 1984 and the maximum allowed by exchange rules. The drop, which accelerated after HSBC, JP Morgan, Nomura and Mizuho reduced their ratings on Casio, erased $931m from the company’s market capitalisation.

Casio, which also makes digital cameras, on Thursday forecast an operating profit of Y53bn for the fiscal year to March 2008, citing costs for developing W-CDMA third generation mobile phones. For the fiscal year that ended in March, Casio reported an annual profit of Y25.1bn, missing its own estimate by 9 per cent.

JP Morgan called Casio's results a "negative surprise," downgraded Casio's shares to "neutral" from "overweight" and lowered its price target to Y2,425 yen from Y2,500 yen. HSBC cut its rating to “underweight” from “overweight”.

Casio, established in 1946, made the world's first compact calculator and was a pioneer of thin compact digital cameras when it launched its Exilim line in 2002, but its ranking among global camera makers has since slipped to ninth amid increased competition and pricing pressure.

The company has since focused on expanding its mobile-phone business, which was its second-largest revenue generator last year after consumer electronics including cameras. Revenue from handsets increased 23 per cent to Y171.3bn last year. Consumer electronics revenue increased 7.3 per cent to Y229.4bn.

Casio, which makes handsets for KDDI, Japan’s second-largest mobile phone operator, will start developing models based on W-CDMA technology. Its range of ultra-thin, large-screen mobile phones for KDDI became the best-selling models in Japan.

But Japanese mobile handset makers have yet to capture sizeable market share overseas after experimenting several times but ultimately retreating back to the domestic market. Several handset makers, such as Toshiba, are now aiming to expand overseas handset sales – particularly in Europe and Asia – amid a saturated market in Japan and a shrinking population.

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