Electronics giant Toshiba
Japans faded titan selling the family silver
AFP
AFP, TOKYO: At a train station used by hundreds of workers at struggling Japanese electronics giant Toshiba, an advert is apparently trying to poach staff worried by their employers precarious financial position.
Do you work for that electronics company? If so, come and work for us! screamed the ad for Toyota.
The mere fact Toshiba staff are apparently being urged to jump ship by rivals underscores the difficulties suffered by the former industrial titan.
Strapped for cash, the firm is soon expected to be forced to sell off part of the family silverits key memory chip business, which accounts for around a quarter of its total annual revenue.
Toshiba has been stuck in tortuous negotiations over selling the segment, which could raise as much as $20 billion.
Three parties have been vying for the prize: a US-South Korean consortium led by investment fund Bain Capital, Toshibas US chip factory partner Western Digital and Taiwans Hon Hai Precision, better known as Foxconn.
On Wednesday, Toshiba said it had signed a memorandum of understanding with the Bain consortium but this did not prevent them still talking to others.
Selling the profitable chip division is seen as key to Toshibas survival, as one of Japans best-known firms battles to recover from multi-billion-dollar losses at its US nuclear operations.
It could also face the humiliating prospect of being delisted from Japans stock exchange if the sale does not raise the sufficient funds.
Fall from grace
The move to sell represents something of a fall from grace for Toshiba, which can trace its history back as far as 1875 when the company set up a telegraph factory in the now swanky area of Ginza in Tokyo.
In the 1930s, the firm manufactured the first Japanese vacuum cleaner, the first fridge and the first washing machine, which still works todayalbeit with an almighty racket.
It has been involved in the manufacture of an astonishing array of items from tiny electronic chips to nuclear reactors, with everything from televisions, computers and highway toll gates in between.
But Toshiba is not the only once-mighty Japanese conglomerate to feel the pain from ferocious foreign competition.
Household names Panasonic and NEC have been forced into major restructuring, and Sharp was acquired by Foxconn.
Toshibas problems stem in large part from what Yasuyuki Onishi, a specialist in the sector, described as its reckless purchase of US nuclear unit Westinghouse, which racked up billions of dollars in losses before being placed in bankruptcy protection.
This is the main cause of the crisis that the group is suffering, Onishi told the news agency.
Those huge losses came to light as the group was still recovering from revelations that top company executives had pressured underlings to cover up weak results for years after the 2008 global financial meltdown.
Its most recent results published in August revealed a loss of $8.8 billion in the last fiscal year, although it predicted it would be back in the black this year.
Pothole in the road
But most analysts believe Toshiba is too important to fail.
Tokyo is believed to be unwilling to lose sensitive technology, with security questions swirling over systems already using Toshibas memory chips, which are widely used in data centres.
The government also needs the company to take care of the painstaking task of decommissioning reactors at the Fukushima plant crippled by the 2011 tsunami.
Toshiba could end up becoming just a company that dismantles Japanese nuclear plants, mused Onishi.
Toshiba will avoid bankruptcy for now but it will shrink and end up disappearing, said the expert.
Masahiko Ishino, an analyst at Tokai Tokyo Research Center, said the sale was designed to help Toshiba meet temporary funding difficulties.
It will fill in a pot-hole in the road, he said, arguing also that the speculated price tag is too cheap.
The business is a magic hat out of which comes 500 billion yen (of operating profit) every year, he said.
Its like a huge property is being bequeathed. Everyone is trying to get a bigger share.
