Toshiba Mulls Sale Of Chip-Unit Stake
November 28 2015 - 3:02AM
Dow Jones News
(FROM THE WALL STREET JOURNAL 11/28/15)
By Takashi Mochizuki and Erikc Pfanner
TOKYO -- Toshiba Corp. on Friday said it is considering selling
a minority stake in its semiconductor business to raise funds in
the wake of a drawn-out accounting scandal.
The business, which sells memory chips to Apple Inc. and other
smartphone makers, has been Toshiba's main moneymaker in recent
years as the fortunes of its personal-computer,
consumer-electronics and nuclear operations have worsened.
Chief Executive Masashi Muromachi said at a news conference that
Toshiba would consider a stock-market listing or a transaction with
another company but would keep control of the operation. "It is a
core business for us, so we won't completely detach the business
from the group," he said, adding no sale is imminent.
The semiconductor business requires continuous investment to
maintain its competitiveness against rivals such as Samsung
Electronics Co. Meanwhile, Toshiba's ability to raise funds has
been squeezed by an accounting scandal.
After acknowledging that it had overstated profits by 155
billion yen ($1.3 billion) over seven years, Toshiba shook up its
management and board this summer. However, disclosures have
continued to trickle out.
Toshiba earlier this month said its U.S. nuclear unit,
Westinghouse Electric Co., booked $1.3 billion in previously
undisclosed impairment charges for its 2012 and 2013 fiscal years.
Though many analysts see Toshiba following suit with a similar
write-down, company executives on Friday reiterated that they saw
no need to do so.
In the most detailed explanation of Westinghouse's financial
situation since Toshiba's accounting problems surfaced earlier this
year, the parent company said the U.S. unit has incurred a
cumulative operating loss of $290 million since Toshiba bought it
2006. Previously, Toshiba had said Westinghouse was profitable,
without specifying a time frame.
Toshiba said its nuclear-fuel and plant-maintenance business
remains profitable and stands to grow as the number of active
nuclear-power plants increases globally. Demand for new plants
collapsed after the Fukushima disaster in Japan in 2011, but
Toshiba officials said it should rebound as global demand for
cleaner energy rises.
"There is no way the U.S. can meet its clean-energy projections
and not increase its nuclear power generating capacity,"
Westinghouse Chief Executive Danny Roderick said in an
interview.
Toshiba said it also aims to take on reactor-decommissioning
projects, which should bring additional revenue.
The company expects to book an operating profit of 30 billion
yen from its nuclear business in the March-ending fiscal year and
projects an average operating profit of 150 billion yen a year from
fiscal 2018 through 2029. But some analysts aren't convinced.
"The presented business outlook is unrealistic in many aspects,"
said Hideki Yasuda, an equity analyst at Ace Research Institute.
"For one, Westinghouse would need to hire a whole lot of workers to
achieve the plan."
Mass hires might be a challenge when Toshiba is focusing on cost
cuts. The Tokyo Stock Exchange has placed the company on a watch
list, making it difficult for the company to issue new shares or
debt.
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(END) Dow Jones Newswires
November 28, 2015 02:47 ET (07:47 GMT)
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