Toshiba predicts $6.4b loss; may shed 7,000 jobs

Toshiba president and CEO Masashi Muromachi bowing during a news conference in Tokyo yesterday to announce an overhaul of its operations following a huge accounting scandal.
Toshiba president and CEO Masashi Muromachi bowing during a news conference in Tokyo yesterday to announce an overhaul of its operations following a huge accounting scandal.PHOTO: REUTERS

TOKYO • Toshiba yesterday forecast a record 550 billion yen (S$6.4 billion) loss and said it will cut more jobs as well as restructure businesses that include chips, television sets, personal computers and home appliances following a long-running accounting scandal.

The expected revamp comes after the Japanese company misled investors by filing false financial statements, partly to conceal the waning performance of its personal computer operations, a mainstay of the electronics and power equipment maker's consumer brands.

Toshiba is trying to recover from an accounting scandal that padded profits for almost seven years by halting development and sales of TV sets outside Japan, cutting costs at its PC and home appliance businesses and considering alliances with third parties.

The company, which employs almost 200,000 people, may cut as many as 7,000 jobs, the Nikkei newspaper reported this month.

"Considering how bad things have got, this level of restructuring is the least they can do," said Mr Mitsushige Akino, Tokyo-based executive officer at Ichiyoshi Asset Management, which does not hold Toshiba shares. "The question is what will the results be two years after the restructuring."

Shares of the industrial conglomerate fell as much as 9.8 per cent, the most since May 11, to close at 254.8 yen in Tokyo before the announcement. The company has lost about US$9 billion (S$12.7 billion), half of its market value, over the past eight months.

Toshiba, which made the world's first laptop computer and first DVD player, has clung to legacy consumer electronics businesses that are wilting under pressure from Korean and Chinese manufacturers.

As its domestic competitors Panasonic and Mitsubishi Electric shift away from consumer products, Toshiba has lagged behind, relying on profit from semiconductors and power generation to subsidise TV sets and computers.

Toshiba will end consignment of design and manufacturing to outside vendors for its PC business, while concentrating on business- to-business sales and shifting focus of its consumer portion of the segment to the Japan and US markets.

Product platforms will be reduced to less than one-third of the current number. Also, its Indonesia TV plant will be sold to China's Skyworth for about 3 billion yen.

Other plans include accounting training, corporate governance reviews, management seminars and an evaluation system for the president and chief executive officer.

"The crisis allows them to make bold moves," said Mr Akino.

Toshiba itself still faces lawsuits from shareholders, while it has vowed to avoid a recurrence of its accounting scandal by bringing in more outside directors. It has also cut executive pay. Regulators have yet to announce results of probes seeking evidence for possible prosecutions of former executives.

"I will do my utmost in leading the implementation of the recovery plan for a rebirth of Toshiba and recovery of everyone's trust," company president Masashi Muromachi told reporters.

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A version of this article appeared in the print edition of The Straits Times on December 22, 2015, with the headline 'Toshiba predicts $6.4b loss; may shed 7,000 jobs'. Print Edition | Subscribe