Maybe Toshiba should stick to TVs and cassette decks

[CountDeMoney]

And man, the Westinghouse name just keeps falling deeper in the dirt

From The Economist

Losing count
Toshiba admits to a ruinous overpayment for an American nuclear firm
Its share price plunged by 40% in three days as investors worried about its financial viability
Jan 7th 2017 | TOKYO

THE probe in 2015 into one of Japan's largest-ever accounting scandals, at Toshiba, an electronics and nuclear-power conglomerate that has been the epitome of the country's engineering prowess, concluded that number-fiddling at the firm was "systemic". It was found to have padded profits by ¥152bn ($1.3bn) between 2008 and 2014. Its boss, and half of the board's 16 members, resigned; regulators imposed upon it a record fine of $60m.

Now its deal-making nous is in doubt too. In December 2015—the very same month that it forecast hundreds of billions of yen in losses for the financial year then under way, as it struggled to recover from the scandal—Toshiba's American arm, Westinghouse Electric, bought a nuclear-construction firm, CB&I Stone & Webster. One year on, on December 27th, Toshiba announced that cost overruns at that new unit could lead to several billions of dollars in charges against profits.

Its shares fell by 42% in a three-day stretch as investors dumped them, fearing a write-down that could wipe out its shareholders' equity, which in late September stood at $3.1bn. Moody's and S&P, two ratings agencies, announced credit downgrades and threatened more. Toshiba's explanation for how it got the numbers so wrong on a smallish purchase is woolly. But it is clear that missing construction deadlines on nuclear-power plants can send costs skyrocketing. Its projects in America, and in China, are years behind schedule. Mycle Schneider, a nuclear expert, says that in America, as elsewhere, engineering problems are compounded by a shortage of skilled manpower. Few plants have been built there recently.

Part of the $229m that Westinghouse paid for CB&I Stone & Webster included $87m of goodwill (a premium over the firm's book value based on its physical assets). It is that initial estimate that is now being recalculated.

Toshiba had looked to be bouncing back from its accounting nightmare. Before the latest plunge it had made the second-biggest gains on the Nikkei 225 index in 2016, where its shares were up by 77%. In April it wrote off $2.3bn on the goodwill value of Westinghouse, purchased for $5.4bn in 2006—a write-down that it had long avoided. In August it announced its first profit in six quarters. It forecast a net profit of ¥145bn for the financial year of 2016-17, a clear reversal from its ¥460bn loss of the previous year. Part of that was thanks to a bold turnaround plan: firing 14,000 staff, as well as selling lossmaking parts of its manufacturing empire, like TVs, and one of its star units, a medical-equipment maker, for $6bn.

That left it free to focus on its semiconductor arm, which has been buoyed by demand from Chinese smartphone makers, and its nuclear unit, which accounts for a third of its revenue. The latest write-down could dampen future investment in both. Toshiba has limited ways left to raise cash. It has been barred from doing so on the stockmarket ever since it was put on alert after the accounting fiasco—one step short of a delisting.

Observers reckon that Toshiba has some room to manoeuvre, and that it will not ditch its nuclear business. It could raise as much as $4bn from the sale of some part-owned subsidiaries, including NuFlare, a spinoff of its semiconductor unit, says Seth Fischer of Oasis Management in Hong Kong, a hedge fund, and a shareholder in Toshiba's power-station affiliate. It could even choose to sell its lucrative chip business altogether (Toshiba is the world's second-biggest maker of NAND chips after Samsung Electronics of South Korea), as well as some of its remaining consumer-electronics ones.

Toshiba's central part in a plan by the government of Shinzo Abe, the prime minister, to pep up growth by exporting nuclear-power technology to emerging countries may help. In June Westinghouse clinched a deal in India to build six new-generation AP1000 reactors, Toshiba's first order since the triple meltdown at the Fukushima Dai-ichi nuclear plant in 2011. Toshiba is also involved in that site's costly and complex clean-up. Some think that Japanese banks, known for keeping zombie firms on life support, will stand behind it, come what may. Shares in Toshiba's two main lenders, Sumitomo and Mizuho, slid last week after the profit warning. Investors expect more big bank loans or a debt-for-equity swap, which allows a bank to turn bad loans into shares.

The consensus on Toshiba's latest screw-up is that a long-standing culture of poor management is to blame. Toshiba's audit committee, for example, was until 2015 headed by its former chief financial officer; such bodies should be fully independent, says Nicholas Benes of the Board Director Training Institute of Japan. It is not clear whether or not the firm has fully overhauled its culture as part of its response to the scandal laid bare in 2015. Satoshi Tsunakawa, who was installed as the company's new boss in June 2016, said last week that he had only become aware of the problem with CB&I Stone & Webster in December. It was in 2015 that Mr Abe introduced Japan's first detailed rules on how companies should run themselves. The spectacle of Toshiba's apparently endless crisis suggests more needs to be done.

[11B4V]

Ya for capitalism. Seems like a Trump move.

[Ed Anger]

Ya for capitalism. Seems like a Trump move.

Or somthing the guy from Sears Holdings would try.

[Josquius]

Japanese electronics companies are super high tech and super dominant in the world.
This is one of those "rules"  that are just established in the planets canon though they no longer hold any truth behind them.
  They're all in trouble....

[Syt]

In the 80s/90s we were promised a Japan-dominated cyberpunk future.




Instead we got this.

[Duque de Bragança]

So worse than the HD-DVD failure. 

[The Larch]

My work laptop is a Toshiba and it's been falling apart bit by bit in the last few months. Coincidence? I think not.

[grumbler]

My work laptop is a Toshiba and it's been falling apart bit by bit in the last few months. Coincidence? I think not.

You think it's the Laptop of Dorian Toshiba?

[CountDeMoney]

Instead we got this.

It's as if we nuked them to stupid.

[Monoriu]

Anime moeness > cyberpunk

[The Larch]

My work laptop is a Toshiba and it's been falling apart bit by bit in the last few months. Coincidence? I think not.

You think it's the Laptop of Dorian Toshiba?

Then it must have seen the really aged backup copy from itself that it kept in a dark corner of its hard drive.

[garbon]

Instead we got this.

It's as if we nuked them to stupid.

A dark society would have been better?

[celedhring]

In the 80s/90s we were promised a Japan-dominated cyberpunk future.

Instead we got this.

I wonder if the new Blade Runner flick will have updated its visuals to reflect this development 

[Duque de Bragança]

Anime moeness > cyberpunk

What about cyberpunk anime?

[Syt]

A dark society would have been better?

Not necessarily dark. I just read an interview with William Gibson, where he says that Japan is one of the best places for future nostalgia, as its innovative spirit in the 80s and 90s promised a myriad ambitious futures. He laments that this society wide spirit of "thinking big" (according to him also present in the American 50s) has largely disappeared disappeared. People were curious what life in the 21st century would be like. Who's asking what life in the 22nd will be like? (Though personally I think that had a lot to do with the year 2000 milestone having a bigger radiance than 2100.)