Toshiba Corp. has hit an iceberg.
In a desperate bid to lighten the load, CEO Satoshi Tsunakawa cast around for jetsam and settled on its semiconductor business.
Initially it looked like the damage wasn't too bad, so a sale of up to 20 percent of the unit appeared to be all that was required. Now it's clear that the nuclear business has torn a gaping hole in Toshiba's hull, and buried in a company presentation was the revelation that it might sell a majority of the memory-chip operation.
And then Tsunakawa said in a briefing late Tuesday that selling the entire thing was possible.
This is wonderful news for prospective bidders. I argued last month that a minority purchase alone doesn't hold much strategic value for an investor. It would have been like finding a left shoe washed up on the beach, whereas now both shoes are boxed and wrapped.
For both Toshiba and any buyer, the value of the business as a whole is much more than the sum of five 20 percent stakes. This is especially the case in a commodity hardware sector like memory chips where economies of scale are a key competitive advantage. While sales are growing, the unit lost 101.6 billion yen ($889 million) at the operating level last year, the first deficit in at least six years. That shows turnaround potential.
Much as Foxconn Technology Group has done with Sharp Corp., majority control could allow the buyer to integrate the business into its own operations, boost scale, improve efficiency and cut costs. With about 20 percent of the NAND flash memory market, Toshiba would also give its new owner significant bargaining power when negotiating with customers.
Sadly for Toshiba's shareholders, it would mean saying goodbye to one of the company's crown jewels. But that's surely better than having the unit become sunken treasure.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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Tim Culpan in Taipei at firstname.lastname@example.org
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