Electronics and machinery giant Toshiba Corp. continues to flounder after massive losses in its nuclear power business in the United States came to light in December 2016, plunging the corporation into negative net worth. Toshiba’s auditor gave only qualified approval of its business results for the fiscal year ending March 2017 due to a disagreement over how Toshiba handled the losses on its balance sheet, leading to a delay in announcing its annual earnings results and filing its annual securities report. To erase its negative net worth, the firm is in talks to sell Toshiba Memory Corp., its flash memory unit, but no agreement on a sale has been reached yet.
Toshiba was one of Japan’s best-known electronics and machinery companies, with operations all over the world. But in addition to accounting irregularities that came to light two years ago, the company’s sudden December 2016 announcement of huge losses has left its reputation in tatters. The company is in danger of being delisted from the Tokyo Stock Exchange and its plunge into negative net worth puts it at risk of bankruptcy. Below I explore why Toshiba’s abnormal situation is continuing and what lies ahead for the company.
Improperly Posted Losses
Toshiba submitted its annual securities report for fiscal 2016 (April 2016–March 2017) to the Kantō Local Finance Bureau on August 10 and held a press conference the same day to announce its annual earnings results. The results should have been announced in May, but after being granted an extension the company submitted its annual securities report to the tax authorities six weeks past the usual end-of-June deadline. It is rare for a listed company—and exceedingly so for a giant concern like Toshiba—to be unable to announce its results and submit its report by the deadline. read the rest here