Angry investors lambasted Toshiba executives at a shareholder meeting today after it warned annual losses could balloon to more than USD 9.0 billion but they agreed to the sale of its memory chip business, the jewel in the Japanese giant’s crown. The heated meeting held just outside Tokyo comes a day after the huge conglomerate said its troubled US nuclear power unit Westinghouse Electric had filed for bankruptcy protection.
Toshiba, one of the pillars of corporate Japan, also warned yesterday its annual losses, mainly tied to Westinghouse, could blow out to 1.01 trillion yen (USD 9.07 billion), compared with an earlier projected shortfall of 390 billion yen. That would be a record annual loss for a Japanese manufacturer, according to Bloomberg.
Toshiba has delayed formally reporting its earnings over the problems at Westinghouse, which it bought for more than USD 5.0 billion a decade ago.
Among the issues, Toshiba has said it is probing whistleblower allegations of accounting misconduct by senior Westinghouse executives. Today’s meeting was held to get shareholder approval to spin-off Toshiba’s prized memory chip business, seen as key for the cash-strapped company to turn itself around. The motion was approved.
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Toshiba is the world’s number two supplier of memory chips for smartphones and computers, behind South Korea’s Samsung, and the business accounted for about one-quarter of its 5.67 trillion yen in revenue last fiscal year. “It’s unforgivable that they could book a trillion yen loss — management should quit,” a 75-year-old investor, who identified himself only as Tomari, told AFP before the shareholder meeting started.
The crisis comes less than two years after Toshiba’s reputation was badly damaged by separate revelations that top executives had pressured underlings to cover up weak results after the 2008 global financial meltdown.
That scandal laid bare serious problems with Toshiba’s internal governance and an unwavering employee loyalty highlighted in other Japan Inc scandals, including the USD 1.7 billion loss cover-up at camera giant Olympus and staff hiding a deadly airbag defect at auto parts giant Takata.