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Toshiba execs under fire as loss forecast balloons
[CHIBA, Japan] Angry investors lambasted Toshiba executives at a shareholder meeting Thursday after it warned annual losses could balloon to more than US$9 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 Wednesday its annual losses, mainly tied to Westinghouse, could blow out to 1.01 trillion yen (S$12.65 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 US$5 billion a decade ago.
Among the issues, Toshiba has said it is probing whistleblower allegations of accounting misconduct by senior Westinghouse executives.
Thursday'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.
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 US$1.7 billion loss cover-up at camera giant Olympus and staff hiding a deadly airbag defect at auto parts giant Takata.
Toshiba president Satoshi Tsunakawa and other executives faced more than 1,300 shareholders who turned up to Thursday's meeting.
"We apologise to all stakeholders, including shareholders, for causing this trouble and worry over our nuclear business," Mr Tsunakawa said.
Shigenori Shiga, who once headed Westinghouse and stepped down as Toshiba's chairman in February, was not at Thursday's meeting.
"Why is Mr Shiga not here today?" asked one angry shareholder.
"The people who were in charge aren't even here today." Toshiba cited "health issues" for the absence of Mr Shiga, who is still with the company.
"Toshiba is now a laughing stock around the world," said one shareholder.
"You're all incompetent managers. Do you even know what's going on?"
Toshiba shares jumped four per cent to 228.2 yen Thursday in response to news that the memory chip sale will go ahead, with bids expected this week.
But the stock has lost more than half its value since late December when it warned of huge losses and the probe at Westinghouse.
Japanese financial regulators have given Toshiba until April 11 to publish results for the October-December quarter - they were originally due in mid-February.
The firm is at risk of an embarrassing delisting from Tokyo's stock exchange.
"I'm watching the share price everyday," a 70-year-old investor said.
"The value of my small investment depends on them" she added, referring to Toshiba executives.
Westinghouse was once hailed as a future growth driver after the 2011 Fukushima nuclear accident brought new business in Japan to a halt.
But the US firm has been hit by the project delays and cost overruns at plants in two states while weakening prospects for the nuclear power industry globally have also weighed on its fortunes.