Toshiba shares slump a second day as analysts suspend ratings on accounting probe

Shares of Toshiba Corp fell in Tokyo for a second day as the number of analysts suspending coverage reached six in the aftermath of an investigation into improper accounting on projects. -- PHOTO: AFP
Shares of Toshiba Corp fell in Tokyo for a second day as the number of analysts suspending coverage reached six in the aftermath of an investigation into improper accounting on projects. -- PHOTO: AFP

TOKYO (Bloomberg) - Shares of Toshiba Corp fell in Tokyo for a second day as the number of analysts suspending coverage reached six in the aftermath of an investigation into improper accounting on projects.

The stock dropped 3.2 per cent to 391 yen (S$4.35) as of 10am in Tokyo, extending the decline in the past two days to 19 per cent. Goldman Sachs became the sixth bank to suspend ratings since Toshiba announced the investigation on May 8, according to data compiled by Bloomberg.

Toshiba is probing accounting methods used in units that encompass nuclear, hydroelectric and wind power equipment, air-traffic control and railway systems. The company, which also makes memory chips and personal computers, said it may have to restate earnings as far back as 2013.

"This raises questions about the reliability of the financial figures on which our earnings estimates are based," Takeo Miyamoto, an analyst at Mitsubishi UFJ Morgan Stanley, said in a May 11 report, suspending a neutral rating. "We intend to reassign a rating on the stock when conditions allow us to reformulate an investment opinion."

Toshiba had previously projected net income of 120 billion yen on sales of 6.7 trillion yen in the year ended on March.

Several construction projects have understated costs, Toshiba spokesman Aya Oshima said on May 8. The magnitude of the earnings restatement and responsibility for the misstatements aren't yet clear, Oshima said.