16 June 2019

Toshiba Forecasts Massive Annual Loss

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The estimated loss is significantly higher than analysts had expected, and is six times more than the 90.5 billion yen ($734 million) loss it posted for the first half of the year. Some of the losses are associated with a huge restructuring plan Toshiba announced Monday. The company will cut about 6,800 jobs in its consumer electronics divisions by the end of March, and another 1,000 employees at its headquarters, according to company statements released after markets closed in Tokyo.

Toshiba will also shutter its audio-visual business in all countries except Japan, and instead focus on licensing its brand in foreign markets. The $4.5 billion annual loss will result from restructuring costs, poor performance from the company's energy and electronic devices divisions and income tax payments. Toshiba shares plunged 10% Monday in anticipation of the reorganization.

Toshiba has been struggling to recover from an accounting scandal that resulted in inflated profits. Shares of the company have fallen 50% this year, as the scale of the problem has continued to grow, forcing CEO Hisao Tanaka to resign in July.

Other executives have also stepped down, and Toshiba has corrected its earnings statements from previous years. The headache started in April, when Toshiba itself began investigating accounting practices in its energy division.

Toshiba was founded in 1875, and made a name for itself introducing technological advancements in Japan from electric washing machines to refrigerators, and later, the world's first color TV. Today, the company has expanded from consumer electronics to include a diverse range of products from nuclear power to medical equipment. Miles said there could still be additional "skeletons in the closet" at Toshiba.

Click here to access the full article on CNN Money.

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