Toshiba Corp president and CEO Masashi Muromachi (2nd right) leaves a news conference at the company headquarters in Tokyo yesterday. Muromachi told reporters the group considers listing its chip business as one option, and may also sell a stake in its medical equipment unit.

Bloomberg
Tokyo


Toshiba Corp forecast a record ¥550bn ($4.5bn) loss and will cut more jobs and restructure businesses that include chips, televisions, personal computers and home appliances following a long-running accounting scandal.
The projected net loss for this fiscal year includes ¥260bn in taxes because of a reversal of deferred income tax assets, it said in a statement Monday. The forecast doesn’t include possible impairment of goodwill and fixed assets at the company’s nuclear power systems business because Toshiba is still checking that, it said.
Toshiba, trying to recover from an accounting scandal in which it padded profits for almost seven years, is halting development and sales of TVs outside Japan, cutting costs at its PC and home appliances businesses and considering alliances with third parties.
President Masashi Muromachi told reporters yesterday the group considers listing its chip business as one option, and may also sell a stake in its medical equipment unit. Toshiba has a 34% share of the global market for flash memory chips used in smartphones and mobile devices through its alliance with SanDisk Corp
“Considering how bad things have gotten, this level of restructuring is the least they can do,” said Mitsushige Akino, Tokyo-based executive officer at Ichiyoshi Asset Management Co, which doesn’t hold Toshiba shares. “They need to do more, but it’s not as simple as cutting people and closing unprofitable businesses. The questions is what will the results be two years after the restructuring.”
Shares of the industrial conglomerate fell 9.8%, the most since May 11, to close at 254.8 yen in Tokyo trading before the announcement. The company has lost about $9bn, half of its market value, over the past eight months since initially announcing an accounting probe.
The company will end consignment of design and manufacturing to outside vendors for its PC business, while concentrating on business-to-business sales and focusing the 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, the company said.
Hong Kong-listed Skyworth Digital agreed to buy Toshiba Consumer Products Indonesia for “adjusted consideration” of $30.1mn, the Chinese TV maker said in a statement yesterday.
Plans also include accounting training, corporate governance reviews, management seminars and an evaluation system for the president and chief executive officer, according to the statement yesterday.
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.
“I will do my utmost in leading the implementation of the recovery plan for a rebirth of Toshiba and recovery of everyone’s trust,” Muromachi told reporters Monday in Tokyo.
Toshiba itself still faces lawsuits from shareholders, while it has vowed to avoid recurrence by bringing in more outside directors and it has 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 and Japanese medical equipment manufacturer Topcon Corp
In addition to workforce cuts in the lifestyle business, the company 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 at least 2009, according to data compiled by Bloomberg.
The scale of the company’s projected ¥550bn loss is more than double total net income for the previous two decades.
“Not everything about Toshiba’s lifestyle business is bad,” said Yasuaki Kogure, chief investment officer at SBI Asset Management Co “It’s just not quite clear what the Toshiba brand will stand for after this.”