Toshiba Forecasts $1 Billion Loss (zdnet.com)

Toshiba has announced a forecast net loss of $970 million due to the tax impact of selling its memory chip business, which was itself sold to make up for losses incurred from its nuclear energy business. ZDNet reports: The loss will come instead of its previously forecast net profit of 230 billion yen due to taxes incurred during the sale of the chip business, although its revenue forecast remains unchanged, Reuters reported. Toshiba had last month announced that it would be selling its memory chip business for 2 trillion yen to a consortium led by Bain Capital that includes Seagate and is backed by the Japanese government. As part of the sale, Toshiba said it would be investing 350.5 billion yen into the memory chip unit, maintaining some ownership over it, and last month said that it expected to close the deal "within days."

The tech company had originally named Bain as its preferred bidder back in June, although the sale had been slowed down after joint venture partner Western Digital had struggled to submit a competing bid alongside KKR after its original bid was rejected. As a result, Toshiba announced in June that it was planning to sue Western Digital for 120 billion yen, claiming the latter had interfered in the sale of the memory chip business. Western Digital had "continually interfered with the bid process" and "exaggerated" the power it had in relation to a potential sale, Toshiba claimed, and also made moves to prevent Western Digital employees in its Yokkaichi plant from accessing information pertaining to their partnership. Reuters said the delayed sale could potentially lead to Toshiba "not getting anti-trust clearance before the end of the financial year," which could in turn result in the Tokyo Stock Exchange delisting the company.

Comments

Toshiba nuclear ...

[140Mandak262Jamuna]

I vaguely recall that division sold the top secret low-noise low-cavitation propellors of nuclear submarines technology to the Ruskies....

How things have changed since...

Re:Toshiba nuclear ...

[AmiMoJo]

Unrelated to their current difficulties. Toshiba owned Westinghouse Electric Company, and nuclear power has been in decline for a decade. There were doubts about the AP1000 reactor design, and they became more urgent after Fukushima in 2011. As renewables developed quickly there was less and less money being thrown at nuclear, and some poor engineering/project management lead to massive losses on plants being constructed in Georgia and South Carolina.

It's not just Toshiba/Westinghouse though, European nuclear power systems are struggling to get built and make any money now too. It's a dying industry, the promised renaissance was cancelled, and Toshiba bought in at just the wrong moment.

Impressive memory

[Zontar_Thing_From_Ve]

I vaguely recall that division sold the top secret low-noise low-cavitation propellors of nuclear submarines technology to the Ruskies....

How things have changed since...

I did a search on that. That was 30 years ago. Toshiba Machinery and Norway's government owned Kongsberg both were involved in that debacle. Clearly the sales were a violation of export control but at the time it seems that nobody was talking about holding Norway responsible for their part in that and there was some debate about whether that particular sale really was the cause for Soviet submarines getting quieter. Senator Nunn at the time said that Soviet subs were getting quieter prior to the sale.

Re:Sad to see entire industries struggle like this

[dj245]

Free market capitalism isn't always pretty or nice. But these are things that needed to happen and in the end it will produce the most efficient supply chain and lowest prices. It's no different than a cheetah bringing down a gazelle on the African savanna. These are things that need to happen for the good of us all..

Did it need to happen? I am a former Toshiba employee, and my take on this is that their troubles stem from a couple major issues:

1. Toshiba invested approximately $1B or more in Nuclear technology prior to the Fukushima disaster. They were not alone- Alstom and other companies expected a Nuclear Renaissance to provide clean base load power to support future growth of non-dispatchable renewable power. The value of this R&D, staffing, and facility buildup is now approximately $0.

2. Toshiba sold 4 new reactors in the US which were under construction or about to begin construction at the time of Fukushima. These projects were sold and managed by a somewhat recently acquired subsidiary (Westinghouse Nuclear). It turns out that Westinghouse had no idea what they were doing, anyone with a clue had either retired or left. The contract didn't account for all the costs and cost overruns were rampant, as can be expected from poorly run projects. Now some or all of these project may be cancelled, and the escape clauses are not particularly favorable to Toshiba. Toshiba (HQ) financially guaranteed the project for the US subsidiary, which exposed them to financial risk. I am sure the customers insisted on this, but normally, the Japanese parent company is financially insulated from overseas subsidiaries to some extent - the subsidiary is a separate financial entity and normally goes bankrupt without pinching the parent company too hard.

3. Toshiba couldn't absorb both of the above hits. Their banking partners downgraded their credit, their stock took a dive, and they have had to scramble to put their financial house back in order.

I wouldn't say it is "for the good of us all" that the final nail has been hammered into nuclear power. In the US, aging coal plants are being replaced with natural gas. In Japan, they are operating coal plants that had been slated for retirement, and installing new natural gas plants. Perhaps this is more financially efficient, but many people would argue that it is a massive blow to the effort to improve the worldwide carbon footprint. And it wasn't inevitable, just the consequence of poor project management and natural disaster chance.