Toshiba PC Business Back Under Microscope As $2.2 Billion Scandal Gets Murkier
The former President and current Vice-Chairman of Toshiba, Norio Sasaki is tipped to quit the board at the scandal plagued PC Company where profits were padded so that executives could get higher bonuses.
New speculation has emerged that the Company is set to review their PC business which has not increased sales since 900 staff were sacked last year and 19 global PC sales operations shut down.
At the weekend it emerged that current Vice Chairman who was a big supporter of the Companies PC business is getting ready to quit as the $2.2 billion accounting scandal at Toshiba gets murkier as independent investigators probe the scandal ridden Company.
Not helping is the fact that the overall PC market in Q2 is down more than 10% and in some markets Toshiba PC sales are down over 13%.
The company’s president Hisao Tanaka may also be forced to own responsibility for the scandal and quit, according to a Japanese media outlet that cited sources close to the development.
A Toshiba source who told me three months prior to the axing of several subsidiaries last year has said that “Things are not looking good in the PC division. I and several of my colleagues could lose our jobs”.
Last year Toshiba cut 900 jobs in a restructuring of its PC business this included an exit from business-to-consumer operations in several regions. Despite this move the division is still losing money.
At the time the Company who is under pressure in the Australian PC market cut operating profit by $552 million.
A decision on their resignations will be “finalised” after the submission of a report by a third-party panel appointed to investigate the accounting scandal, Kyodo News reported, citing sources.
Tanaka and Sasaki reportedly exerted pressure on their subordinates to reach profit targets.
But it was during Tanaka’s tenure that the company has been found to have shown “padded profits”, sources said, according to Kyodo News. Tanaka’s predecessor Sasaki was the president of the Japanese electronics maker from June 2009 to June 2013.
Toshiba may have “overstated profits” by about $2.2 billion for five financial years till March 2014.
Toshiba has withdrawn its earnings estimate for the financial year ending March 2014 and also refrained from announcing dividend for the year.
The company is likely to release its earnings report in August after an investigation by the third-party panel is completed.
Taking stock of the situation, the Tokyo Stock Exchange is expected to put Toshiba shares as “securities on alert” to notify investors about the company’s questionable internal controlling processes, according to sources close to the matter.