Recent news revealed that a potential loss of several hundred billion yen is heading towards Toshiba Corp just before their financial year ends. The company reportedly loses billions with the recent acquisition of the U.S. nuclear power construction business, leaving the company’s stock dwindling to 12 percent and sees a concern in its incoming accounting acumen.
The Toshiba Corp. acquired Chicago’s Bridge and Iron’s nuclear construction business last year at December, the deal was closed at $229 million by its Westinghouse division. A potential component for the swerving stock is the accounting scandal the company faced last 2015. According to local Medias, the company is expected to lose at least 100 billion yen to 500 billion yen which is roughly $850 million to $4.3 billion.
In a report from Westinghouse last January 4 this year, which the acquisition of CB&I Stone was completed. According to Toshiba, that as part of a dispute over the value of the acquired unit’s assets last July 2016. The deal consisted of the possible adjustments to the purchase price depending on the evaluation of the assets.
Meanwhile, the company 2015 accounting scandal left them $1.3 billion less and tallying a write-down of more than $2 billion for its nuclear business in the last financial year. The Mathayos Japan’s former investment banker and founder of energy consultancy Tom O’Sullivan said that the nuclear plant acquisition coincides with the finalizing of a record fine by the Japanese regulators for accounting irregularities at Toshiba. The conglomerate of Toshiba announced that it would make any necessary announcements and follows it with a board meeting on the matter this Tuesday.
Toshiba Sees a Better Future with Memory Chip Business
Toshiba’s share price in Tuesday trading on the Tokyo Stock Exchange dips and closes at 11.6 percent as investors are flocking to renew their concerns as the company’s earnings are getting bleaker. According to the company’s executives, the nuclear business is seeing a silver lining and reassuring that the reactor operating the business is an important pillar despite the global trend away from the nuclear power after the 2011 Fukushima Daiichi accident.
The Japan tech giant has reportedly publicized an estimated 145 billion net profit by the end of their financial year this coming March 2017 due to the company’s upturn in the computer memory chip business which is one of their core units. However the volatility of the computer chip and memory business requires a constant huge investment to keep up with the market leader’s pace and other industry leaders such as the Samsung Electronics Co. and with the current nuclear business receiving the low end, Toshiba might struggle in sustaining the memory chip business’ success.
According to Tokai Tokyo Research Center’s analyst Masahiko Ishino, noted that Toshiba’s focus will sway from whether they will divest some businesses if the latest loss wipes out its shareholder’s equity. To add, Ishino said that a lot of companies are really interested with Toshiba and that its NAND flash memory business would attract a huge bidding and offers as there are few players in that market.
By September, Toshiba’s shareholder’s equity was at 363 billion yen or just 7.5 percent of assets which will crash to zero if the tech company is forced to log significant losses. The company also replaced its top management last 2015 after it padded its financial results for years.
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