Toshiba plunges to 36-year low af­ter loss fore­cast

The Pak Banker - - COMPANIES/BOSS -

Toshiba Corp. dropped to a 36-year low in Tokyo af­ter widen­ing its an­nual loss fore­cast to a record 710 bil­lion yen ($6 bil­lion) as the Ja­panese in­dus­trial group re­struc­tures in the wake of an ac­count­ing scan­dal.

Shares fell 11 per­cent to 176.3 yen, the low­est close since De­cem­ber 1979, ac­cord­ing to data com­piled by Bloomberg. Toshiba's new fore­cast is 29 per­cent 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 in the process of hiv­ing off as­sets. 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 Ltd., 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. Muro­machi has said there will be no pub­lic fundrais­ing for two years.

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