Toshiba plumbs six-year low after US$4.5b loss forecast

[TOKYO] Toshiba Corp fell to the lowest in more than six years in Tokyo after forecasting a record 550 billion yen (S$6.32 billion) loss and announcing plans to cut more jobs as it restructures businesses.

The shares fell as much as 11 per cent to 225.8 yen, dropping to their lowest since March 2009 on an intraday basis. That slump followed a decline of 9.8 percent on Monday.

Toshiba has been dogged by an accounting scandal, prompting the company to consider third-party alliances for some units and a restructure of the business that makes TVs and PCs.

President Masashi Muromachi is considering options such as listing the memory chip division or selling a stake in a medical equipment unit after restating earnings across seven years.

"Considering how bad things have gotten, this level of restructuring is the least they can do," said Mitsushige Akino, Tokyo-based executive officer at Ichiyoshi Asset Management Co, which doesn't hold Toshiba shares.

"They need to do more, but it's not as simple as cutting people and closing unprofitable businesses. The questions is what will the results be two years after the restructuring."

The projected net loss for this fiscal year includes 260 billion yen in taxes because of a reversal of deferred income- tax assets, it said in a statement on Monday.

The forecast doesn't include possible impairment of goodwill and fixed assets at the company's nuclear power systems business because Toshiba is still checking that, it said.

NEW MANAGEMENT

The company said on Monday it will consider the sale of property and investments after earlier selling its holding in elevator maker Kone Oyj. Other plans include accounting training, corporate governance reviews, management seminars and an evaluation system for the president and chief executive officer.

Mr Muromachi is working with new management after former presidents Hisao Tanaka, Norio Sasaki and Atsutoshi Nishida resigned in July to take responsibility for the accounting irregularities. The company said it would seek damages in a lawsuit against former executives, including the three and two former chief financial officers, over their role in the scandal.

"I will do my utmost in leading the implementation of the recovery plan for a rebirth of Toshiba and recovery of everyone's trust," Mr Muromachi told reporters on Monday in Tokyo.

Toshiba itself still faces lawsuits from shareholders, while it has vowed to avoid recurrence by bringing in more outside directors and cut executive pay. Regulators have yet to announce the results of probes seeking evidence for possible criminal prosecutions of former executives.

In addition to workforce cuts in the lifestyle business, the company will reduce its corporate division by 1,000 people and chip operations by 2,800 workers.

Toshiba had about 198,700 employees as of March 31, the lowest since at least 2009, according to data compiled by Bloomberg.

BLOOMBERG