TOKYO (BLOOMBERG) - Shares of Toshiba dropped to a 35-year low on Friday (Feb 5) after widening its annual loss forecast to a record 710 billion yen (S$8.5 billion) as the Japanese industrial group restructures in the wake of an accounting scandal.
Shares fell as much as 14 per cent, headed toward the lowest close since December 1979, according to data compiled by Bloomberg. Toshiba's new forecast is 29 per cent wider than an earlier projection for a 550 billion yen shortfall and the 505.5 billion yen loss average of 10 analysts' estimates compiled by Bloomberg.
Revelations that management was complicit in padding profits for almost seven years has rocked the conglomerate, prompting writedowns and the departure of executives.
President Masashi Muromachi is cutting jobs, selling Toshiba's medical unit and considering a reorganization of its PC and TV operations as the company's shares languish near a 35-year low.
"To get to a healthy balance sheet from this point will take many years of work, so we are just coming to the end of the beginning of a very long race," said Damian Thong, an analyst at Macquarie Group Ltd. in Tokyo. "They've got to complete the medical sale and find a way to permanently resolve the overhang in the appliances and consumer electronics businesses."
On Thursday, Toshiba posted a net loss of 516.7 billion yen for the three months ended December, based on Bloomberg calculations from nine-month results. That compares with a 54.6 billion yen profit a year earlier and the 111.5 billion yen loss average of four analysts' estimates compiled by Bloomberg.
Toshiba, which was founded 140 years ago, is soldiering on with its internal overhaul. The company said Thursday it was offering buyouts or reassignment to 90 health-care workers and 150 employees in its hard-drive business, while an unknown portion of its executives and managers will have to take pay cuts from this month. It will book a one-time restructuring charge of 4 billion yen.
In addition to workforce cuts in the lifestyle business, the company has said previously it will reduce its corporate division by 1,000 people and chip operations by 2,800 workers. Toshiba had about 198,700 employees as of March 31, the lowest since the end of fiscal 2008, according to data compiled by Bloomberg.
It's also in the process of hiving off assets. Mr Muromachi has said Toshiba is considering selling a majority stake in Toshiba Medical Systems, a maker of diagnostic imaging systems such as MRI, X-ray and ultrasound equipment, to outside investors. There may be as many as 10 potential buyers, including Sony Corp, Mitsui & Co and Hitachi, the Yomiuri newspaper reported Jan 30.
The company in December said it's seeking a 300 billion yen credit line from banks. Combined with a 400 billion yen credit line Toshiba received in September, that would bring Toshiba's total loan facility to more than 1 trillion yen, the company said at the time. Mr Muromachi has said there will be no public fundraising for two years.