Changing Policy for Survival

Toshiba submitted its annual securities report to Kantou Local Finance Bureau earlier this month. The company attached a limited approval of PricewaterhouseCooper Arata LLC, which indicated difference of assessment over when the managers of Toshiba had recognized the deficit in nuclear power generation business. Next issue is to which company it will sell its semiconductor business.

According to its joint settlement of account at the period of March 2017, which was announced with three months of delay, final bottom line of Toshiba was ¥965 billion of negative earnings, renewing the record of the greatest deficit of a manufacturer in Japan. Capital of stockholders at the end of March was reduced by ¥552 billion, which meant heavy insolvency.

PwC Arata concluded that the settlement of Toshiba was appropriate, while difference of opinion over deficit in nuclear power generation business still remained. “Our settlement proved to be normal,” told President Satoshi Tsunakawa. The settlement in the second quarter of 2017 marked ¥96 billion of profit, which was the best record of the company in any April-June periods. Final bottom line in the second quarter was ¥50 billion.

Now, Toshiba is seriously looking for a buyer of its semiconductor business to avoid being dropped out from the list of Tokyo Stock Market with two consecutive annual insolvencies. It was once announced that Toshiba would put priority on the joint group of Japan, United States and South Korea to sell the business. Then, Western Digital, a close partner of Toshiba, strongly opposed that policy, because WD’s investment in producing semiconductor could be handed over to its rival company.

Newspapers reported on Thursday that Toshiba was considering selling its semiconductors business to WD, shifting from Japan, U.S. and South Korea coalition. Concerning the lawsuit by WD opposing to the deal with the coalition, Toshiba changed its strategy in selecting its partner before the time limit for final decision set at the end of August.

The opposition between Toshiba and WD was stuck in a quagmire. Against the lawsuit of WD, Toshiba tried to counter with another lawsuit. However, financial supporters of Toshiba required actual contract with the buyer of semiconductors business by the end of August, concerning Toshiba falling into insolvency next march. Toshiba reluctantly accepted the deal with WD. It is still not settled to what extent WD will be involved in the management. The fortune of Japan’s one of the greatest electric appliance companies is still not clear.