Toshiba A Basket Case As Shares Slump 30% & Senior Management Quit
Toshiba who were caught out overstating their profits for more than seven years have seen their shares crash 30% during the past two days. The Japanese Company has also witnessed facing a major exit of senior management in Australia.
After bailing out of the TV market, Toshiba Australia was then forced to quit the consumer PC market mid-2016, due in part to poor management.
Since then the former General Manager of Toshiba Australia’s Information Systems Division, Rob Wilkinson has taken on the role of General Manager of Consumer Business at Ingram Micro.
Also, quitting Toshiba Australia was former Communications and Marketing Manager Mariana Thomas who has taken up a role at Electronics Manufacturer Tarkett along with Paul English the former National Retail Manager who is now General Manager at Joyce Mayne, a Harvey Norman Company.
The 30% drop in Toshiba’s share value followed a 12% share-price decline on Tuesday after initial reports of the write-down of their none PC business.
Toshiba said the problem stemmed from cost overruns at its U.S. nuclear subsidiary, Westinghouse Electric, which it acquired in 2006 when prospects for the nuclear industry looked bright.
Westinghouse is currently building a new generation of power reactors but has been beset by construction difficulties that have increased project costs everywhere.
Toshiba shares fell 80 yen on Wednesday to ¥311.6, hitting the 20% maximum one-day drop allowed by the Tokyo Stock Exchange.
Toshiba is already on a Tokyo Stock Exchange watch list because of the accounting scandal that forced it to take a $1.3 billion write-down for its nuclear business in November 2015. At the time, it acknowledged that it had overstated its profit for seven years.
A reduced stock value makes it difficult to raise funds by issuing new shares. Stock-exchange rules call for a company to be delisted if it falls into negative net worth at the end of its fiscal year and fails to repair the situation within a year.
Toshiba executives said they would ask the company’s banks for support. Toshiba already sold one of its best-performing units, Toshiba Medical Systems, to Canon Inc. this year.
Naoki Fujiwara, fund manager at Shinkin Asset Management, said some investors had seen the nuclear business as a potential growth area because of demand in developing nations. “If you think more of this could happen in the future, it would be difficult to invest in the company over the mid to long term,” he said.