Toshiba: Restructuring Ad Infinitum

20 Jan 2016 | Author: | No comments yet »

It’s The End of Toshiba As You Know It.

Japan’s Toshiba Corp said on Monday it will cut nearly 7,000 consumer electronics jobs after a $1.3-billion accounting scandal, in an overhaul that will streamline the sprawling conglomerate into a company focused on chips and nuclear energy. Over the weekend, The Wall Street Journal and other media reported that Toshiba TOSYY -2.26 % was set to forecast a $4.1 billion net loss for the fiscal year through March, sending shares down 9.8% on Monday. Toshiba also said it would sell its television manufacturing plant in Indonesia, and that eventual job cuts spanning the entire PC-to-nuclear company could be over 10,000 including previously announced cuts and those seeking voluntary early retirement. Due to restructuring costs, which include the sale of its Indonesian TV plant, Toshiba said it expected a net loss of around 550 billion yen ($4.53-billion) in this fiscal year ending in March. “By implementing this plan, we would like to regain the trust of all stakeholders including shareholders and transform ourselves into a robust business,” it said in a statement.

Toshiba, which also makes nuclear power plants, has repeatedly apologised after acknowledging it had systematically doctored its books over several years to inflate profits by ¥152 billion yen. An independent accounting probe said in July that the company suffered from dysfunction in governance and a culture of discouraging employees from questioning their superiors. This is partly due to $1.9 billion of restructuring costs, reflecting the high cost of laying off workers in Japan, where the law requires generous severance packages. The company launched the world’s first mass-market laptop in 1985 but has seen its consumer electronics business dwindle amid price competition with Asian rivals. Before the latest job cuts, Toshiba had already restructured each of these businesses twice over the past few years, with round after round of layoffs.

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