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Editorial: Can struggling Toshiba find a way to move forward?

  • March 15, 2017
  • , Nikkei , p. 2
  • JMH Translation

Toshiba is still mired in uncertainty. It has once again put off announcing its earnings results for the three-month period through December 2016, which were due to be released on March 14, as it failed to obtain the approval of an auditing firm. Following the revelation of deficiencies in internal control of Westinghouse, a U.S. nuclear power utility, the Japanese firm explains that it will need more time to investigate the matter.


Earnings results constitute the most fundamental data for corporate management. If a company cannot confirm these figures, it cannot function as a business entity. To prevent stock delisting and avoid causing problems for common shareholders, Toshiba needs to clarify its current situation as soon as possible.


At the same time, it is also crucial for Toshiba to draw up a plan for its management restructuring and implement it without delay. On March 14, it announced a “Measures to Rebuild Toshiba” plan, placing top priority on the company’s commitment to “eliminating risk related to the overseas nuclear power business.”  


The idea of cutting off Westinghouse makes sense, as the U.S. subsidiary has not been adequately supervised by its parent company in Japan and has spawned huge amounts of losses. Unless Toshiba is able to address the Westinghouse issue, it may incur additional losses from the four nuclear reactors that are currently under construction in the U.S.


The question is how Toshiba will split with Westinghouse. The idea of court-led bankruptcy is being proposed by some people. If Toshiba opts for this course of action, it may have to shoulder additional expenses.


To absorb such losses and bolster its finances, Toshiba has proposed allowing outsiders to acquire a stake in its memory chip business. This has been presented as the second pillar of the “Measures to Rebuild Toshiba” plan.


Although Toshiba and its South Korean rival are the world’s two largest players in the flash memory market, it finds itself in a predicament that is forcing it to spin off that successful business for the sake of its own survival.


But even if Toshiba’s memory chip business is placed under the control of a foreign firm, Toshiba should take advantage of its production bases and technological edge at home to keep its semiconductor technology inside Japan.  


If these restructuring plans are implemented smoothly, Toshiba will be able to carve out a path toward survival as a social infrastructure firm that provides building services and supports the construction of railways and water supply systems behind the scenes. But to reach this point, it needs to overcome various hurdles.The decisions and actions to be taken by Toshiba’s management will be crucial.

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