Toshiba May Be Slipping Into a Tailspin
Toshiba yesterday announced that it is delaying it’s fourth-quarter earnings report after a series of setbacks the Japanese corporation has suffered over the last few weeks. Rumored several weeks ago to be considering selling of its NAND production arm after being defrauded of billions of dollars, any report by Toshiba published now would likely show figures badly in the red. Observers have speculated that the company is delaying so they can get their house in order, nevertheless, shares plummeted eight percent on the news.
The trouble started a few months ago when the Toshiba lost $4 billion due to an accounting scandal at its U.S. nuclear-power subsidiary Westinghouse. This blow was too big to absorb even for the Japanese giant and rumors started floating about that it may sell off its NAND production arm; this was confirmed last week and the likely buyer is their current partner in the NAND factory, Western Digital. The sale would take a large bite out of the company’s profit margin, as making memory in-house is how it saves on manufacturing costs.
During the conference yesterday the company’s board was supposed to give details to shareholder concerning the writedown of subsidiary Westinghouse and perhaps even announce the sale of its nuclear power plants. Instead, however, management said they were not ready to publish the report and the chairman announced he was stepping down. What exactly the future of Toshiba’s nuclear power arm is, remains uncertain but it still will likely be sold.
This puts the completion of several construction projects for nuclear plants in jeopardy, and with it the future of Toshiba. Though the company could likely survive by selling off even more parts of itself, whether that is a sound strategy for the long term is of course debatable. No date for a new earnings conference has been set at time of writing.
Fergus has been tinkering with computers since he was a kid and likes to put a stop to parties by listing the specs of all the digital devices in the room. It's best not to let him near your computer since he'll take it apart and may not put it back together again before he leaves.