Toshiba Declines After Report Probe May Lead to Asset Sales

Updated on

Toshiba Corp. fell in Tokyo trading after a report it may sell assets worth 200 billion yen ($1.7 billion) amid an internal accounting probe that the company has said will lead to earnings writedowns.

The stock dropped 2.1 percent to 386.3 yen in Tokyo on Thursday, after declining as much as 7.3 percent to the lowest intraday since January 2013. The shares are down 25 percent this year, compared with a 12 percent gain in the Topix stock benchmark.

Toshiba has appointed a third-party committee to expand the investigation of accounting irregularities in infrastructure projects to its visual products, PC and chip businesses. It estimated the profit writedown over the previous five years will be 55 billion yen. The company intentionally delayed booking losses, the Nikkei newspaper reported Thursday.

“It’s beginning to look a lot like accounting fraud, raising the question of whether management was complicit,” said Mitsushige Akino, executive officer at Ichiyoshi Asset Management Co. in Tokyo. “It’s no longer about the extent of losses. The company may even face delisting. Institutional investors simply can’t touch the stock.”

Akino doesn’t hold Toshiba shares.

Toshiba is not aware of a deliberate delay in accounting for losses, as it’s still awaiting results of the third-party investigation, spokesman Hirokazu Tsukimoto said Thursday.

Westinghouse Stake

Asset sales may include part of its stake in atomic power plant maker Westinghouse Electric, the Nikkei reported without saying where it got the information. Toshiba had said as early as 2012 that it was considering a sale of as much as 36 percent of that business.

There is no change to the plan to sell part of the Westinghouse stake, Tsukimoto said Thursday.

Toshiba withdrew its earnings forecasts on May 8 and canceled the year-end dividend, citing irregularities related to “percentage of completion” estimates used on infrastructure projects. It has said the third-party probe is due to be completed by the middle of this month.

Writedowns of past profit will rise to more than 100 billion yen, a person familiar with the matter said July 4. That’s almost double the previous estimate by the company.

At least eight analysts have suspended their ratings on the company’s shares amid uncertainty about the probe’s scope. The company initially said it was examining accounting at units for nuclear, hydroelectric, wind-power equipment, air-traffic control and railway systems, then widened the probe to include personal computers and other businesses.

Toshiba also plans to overhaul appliance operations, looking for Southeast Asia partners and cutting subsidiaries, the Nikkei reported. It may also announce new steps for its PC business and changes to chip operations.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE