Are We Watching The Demise Of Toshiba?

Posted: Dec 31 2016, 9:57am CST | by , in News | Latest Business News

 

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Are We Watching the Demise of Toshiba?
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Faced with the chance that it could face a "multi-billion-dollar writedown that could wipe out its shareholders' equity," according to Reuters, Toshiba is running out of ways to fix the problem. 

The company is still recovering from the $1.3 billion accounting scandal in 2015, which caused stocks to go down. now it is facing another crippling charge against profits because there are cost overruns at a U.S. nuclear business that they bought.

Toshiba says that they won't have the final numbers for weeks, but the writedown is expected. They are against a wall because they cannot issue shares because of the restrictions imposed by the stock exchange. It is likely that they will be forced to sell off more assets and stakes.

"Toshiba's immediate problem is that it is burning cash at an alarming rate, and this will be more than challenging," said Ken Courtis, chairman of Starfort Investment Holdings. "I see little option but to sell a slew of non-core assets."

The problem is that few businesses would be great candidates for sales.

"Toshiba doesn't have many saleable assets in hand," Standard & Poor's analyst Hiroki Shibata said, "It has mostly sold assets which have big price tags or that could easily find buyers already. It would be difficult to secure big funds through asset sales."

Many believe that they could use a revived memory chip business, which could help in at least the short term.

"Toshiba will probably need to sell 30-40 percent of the NAND business in an IPO to secure enough cash," a source said.

For now, they will likely do just that, bet on Toshiba's growing chips business, even though they are still concerned.

"If the company wants to survive, it needs to go through a 'scrap-and-build' process," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities. "Right now, even if banks are assisting, it’s like they are throwing their money down the drain."

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<a href="/latest_stories/all/all/46" rel="author">Noel Diem</a>
Noel passion is to write about geek culture.

 

 

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