Daily Management Review

Toshiba Could Lay Off TV & PC Employees, Eyes Partner for Nuclear Business


Toshiba Could Lay Off TV & PC Employees, Eyes Partner for Nuclear Business
After a $1.3 billion accounting scandal, Japanese electronics giant Toshiba Corp could lay off staff in its under performing home appliances, TV and PC businesses.
This was said by the chief executive of the company on Thursday adding that the company was on the lookout for a partner for its nuclear operations.
"The latest accounting problems might have been driven by the fact that some of our businesses have lost earnings power. We must urgently take action in these businesses," Chief Executive Masashi Muromachi told a roundtable of reporters.
A new management team that won approval from shareholders on Wednesday has been launched as a part of the overhaul of Toshiba.
The company's capital base is already weak compared with rivals such as Hitachi Ltd and the restructuring steps may temporarily hurt, said Muromachi. Toshiba is practically unable to raise funds through bond and equity issuance as the company has been placed on the Tokyo Stock Exchange's watch list.
Muromachi added that the company can even go for bank loans if necessary in order to restructure its finance.
The chief executive said that Toshiba's nuclear power business, which has been the centre of investor attention, may need a partner.
"The environment for the nuclear business is tough in Japan, and we need to address various issues to meet revised U.S. regulatory rules," Muromachi said.
Even as Toshiba has made it clear that there was no need for writing down the state that the company had in the  U.S. nuclear unit Westinghouse Electric, analysts and experts have been for long speculating that the value of assets and goodwill related to Toshiba's 87 percent stake in U.S. nuclear unit is overstated.
At the height of the nuclear industry boom in 2006, Toshiba paid $5.4 billion for a majority stake in the US based company. The appeal of nuclear power has however been reduced after the Fukushima disaster and the US shale boom.
Meanwhile Toshiba has managed to reach an agreement for a 400 billion yen ($3.3 billion) two-year commitment line with its main banks just a day ago. The cash strapped company now has a total loan facility of 762 billion yen, including its existing commitment line of 362 billion yen. The agreement would be effective effect from Wednesday to Sept. 29, 2017.
Toshiba has been trying hard to dissuade the ill-effects of the accounting scandal which, an independent probe has indicated, was caused by managers setting overly aggressive profit targets that subordinates could not meet without inflating divisional results.

Earlier this month, the company also announced that it was selling off an Indonesian washing machine factory as a part of the restructuring plan for its overseas white goods production network to cut costs following the crisis from the accounting scandal.
The washing machine plant employs 350 people and was opened by the company in 2012. Unlike the company's factories in Thailand -- its main plants for large appliances in Southeast Asia, the plant in Thailand primarily ships goods for the local market.
(Source:www.wsj.com & www.reuters.com)