Toshiba Corp forecast a record ¥550 billion (US$4.5 billion) loss for the current fiscal year following an accounting scandal and plans for job cuts and restructuring businesses that include televisions, personal computers and home appliances.
The industrial group plans 6,800 job cuts in the lifestyle division and to sell its television factory in Indonesia, it said in a statement yesterday. The company is also to shut and sell its research complex in suburban Tokyo.
Toshiba is narrowing the scope of its business lines after filing false financial statements, partly to conceal the waning performance of its personal computer operations, a mainstay within the electronics and power equipment maker’s consumer brands. The company yesterday said it is pruning its TV and PC businesses to sharpen its focus on energy and memory and is to keep selling off property and investments.
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Shares of the industrial conglomerate fell as much as 9.8 percent, the most since May 11, to close at ¥254.8 in Tokyo trading before the announcement. The company has lost about US$9 billion, half of its market value, over the past eight months as shares plunged after initially announcing the accounting probe more than eight months ago.
Toshiba president Masashi Muromachi is working with new management after former presidents Hisao Tanaka, Norio Sasaki and Atsutoshi Nishida resigned in July to take responsibility for the accounting irregularities. The company said it would seek damages in a lawsuit against former executives, including the three and two former chief financial officers, over their role in the scandal.
Toshiba itself still faces lawsuits from shareholders, while it has vowed to avoid recurrence by bringing in more outside directors and it has cut executive pay. Regulators have yet to announce results of probes seeking evidence for possible criminal prosecutions of former executives.
Toshiba announced the sale of its image-sensor chip operations to Sony Corp in October and has sold stakes it held in Finnish escalator maker Kone Oyj and Japanese medical equipment manufacturer Topcon Corp.
Toshiba had about 198,700 employees as of March 31, the lowest since at least 2009, data compiled by Bloomberg showed.
The Nikkei newspaper reported Toshiba would post a loss that includes ¥200 billion in restructuring costs.
The company could seek to revive profit by narrowing the scope of its business lines.
“Even if they book a massive loss, that still may not be the end of bad news for the company,” Takeo Miyamoto, an analyst at Mitsubishi UFJ Morgan Stanley Securities Co, said in a report yesterday. Miyamoto cited the possibility of further impairment losses and worsening conditions in the flash memory industry as smartphone demand slows.
A loss of ¥500 billion would be double the company’s total net income for the previous two decades.
Prior to the media reports on Toshiba’s probable loss this fiscal year, the average of analyst estimates for net income was ¥56.6 billion, compared with a ¥37.8 billion loss the previous year. Among 19 analysts covering the company, four rate it buy, 10 say hold and five say sell.
Toshiba has also said it is considering combining its PC operations with those of Fujitsu Ltd and Sony Corp spinoff Vaio. It is also considering a deal with struggling display maker Sharp Corp to combine washing machine and refrigerator operations.
In September, Muromachi won shareholder approval to lead the company at an extraordinary meeting that included calls for his resignation. Investors angered by damage done to the company interrupted proceedings several times, shouting over the president.
Muromachi in September pledged to prune underperforming businesses, including workforce reductions in appliances, PCs, TVs and semiconductors.
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