Toshiba to Restructure TV Business to End Losses
Toshiba Corp. (6502) will present a restructuring plan in July designed to turn around television operations that have lost $1 billion in the past two years.
The Japanese maker of flash-memory chips, elevators and reactors plans to make the unit profitable in the second half of this business year ending March 31, Hisao Tanaka, who became president yesterday, told reporters in Tokyo earlier this month.
Toshiba and Sony Corp. (6758) are among Japanese companies that have been reorganizing businesses for years, trying to revive TV operations hurt by falling prices and a strong yen. At the same time, they have tried to speed up development on new products to lure back customers from industry leaders Apple Inc. and Samsung Electronics Co. (005930)
The maker of Regza TVs needs to offer more value-added models, while cutting fixed costs and inventories, Tanaka said, adding details of the plan have yet to be decided.
“Cutting fixed costs by just 10 billion yen ($103 million) isn’t enough,” he said.
The company, whose sales shrank 24 percent in the past five years, plans to set up a new division to house patents held by various companies within the Toshiba group, Tanaka said. These previously tended to be used separately within each division, limiting the potential for sharing innovation, Tanaka said.
“We want to widen our scope of marketing” by tailoring Toshiba solutions for the different technology requirements each industry has, the 62-year-old president said, speaking June 20.
The company ended domestic assembly of TVs in the year ended March 2012 and said in July that it consolidated quality and production control for digital products outside Japan. The company’s TV division posted a loss of 50 billion yen in each of the past two years ended March 31.
Toshiba plans to sell 11 million TVs in the year ending March 2014, unchanged from last business year, according to spokeswoman Naomi Furuya said.
Toshiba fell 1.1 percent to 461 yen in Tokyo trading. The stock has gained 37 percent this year, compared with a 25 percent gain in the benchmark Topix index.
Tanaka said he plans to unveil a new mid-term business plan in August with profit goals and a focus on growth.
The company, the largest flash-memory maker after Samsung, has sold a mobile-phone unit and its small liquid-crystal displays division to shift its focus toward infrastructure and computer chips as part of its reorganization over the past five years. The strategy allowed Toshiba to weather the slump in its TV division, maintaining profits when peers like Panasonic Corp. (6752) and Sharp Corp. (6753) posted losses in the past two years amid slumping TV businesses.
Net income may be 100 billion yen for the year ending March 31, compared with 77.5 billion yen a year earlier, Toshiba said in May. Sales may rise 5.2 percent to 6.1 trillion yen from 5.8 trillion yen. That compares with a peak of 7.7 trillion yen in the year ended March 2008.
The company is in talks to sell as much as 36 percent of its Westinghouse Electric atomic-power business after being forced to increase its stake in the unit to 87 percent, former President Norio Sasaki said in December. Toshiba was compelled to buy 20 percent of Westinghouse in January after Shaw Group Inc. used an option to sell its stake.
“We’re not in hurry to sell the stake,” Tanaka said.
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