Toshiba shares plunge further after loss warning

It has been besieged by problems, most notably a profit-padding scandal in which bosses for years systematically pushed subordinates to cover up weak financial results.

AFP, TOKYO: Toshiba shares plunged by double digits yesterday for a third straight session, as investors dumped the stock on expectations the company will take a massive loss on its US nuclear business.
The troubled company’s stock plummeted as much as 25.55 per cent at one point—virtually the maximum fall permitted for the day—before paring losses to close 16.97 per cent down at 258.7 yen.
Over the three days, the company’s market value declined by an approximately 781 billion yen ($6.70 billion).
On Tuesday, the troubled conglomerate said that costs linked to the acquisition last year by its US subsidiary of a nuclear service company will possibly come to “several billion US dollars” and cause earnings to take a hit.
The exact figure of the potential write-down is still being worked out, Toshiba President Satoshi Tsunakawa told reporters after the announcement.
He hinted the company may seek support from financial institutions to boost capital, while local media Thursday reported it has begun talking with partner banks about such support.
Toshiba shares closed nearly 12 per cent lower on Tuesday after media reports about the potential loss and dived more than 20 per cent on Wednesday—the most they were allowed to fall that day.
“Those who were not be able to sell are selling today,” Nobuyuki Fujimoto, senior market analyst at SBI Securities in Tokyo, told AFP on Thursday, referring to the previous day’s decline to the daily limit.
But in a possible sign that the worst may be over, selling momentum faded somewhat during the day.
Toshiba’s nuclear woes are the latest blow to the once-proud pillar of corporate Japan.
‘Bigger problem’ 
It has been besieged by problems, most notably a profit-padding scandal in which bosses for years systematically pushed subordinates to cover up weak financial results.
In an intensive overhaul, the company has been shedding businesses and announced the sale of its medical devices unit to camera and office equipment maker Canon.
Investors had welcomed the makeover, and shares had climbed 77.3 per cent this year through Monday before the string of declines began. They have now reduced the gain for the year to just 3.5 per cent.
Toshiba said the possible loss was related to the valuation of the purchase by subsidiary Westinghouse Electric of the nuclear construction and services business of Chicago Bridge & Iron.
Analysts have said uncertainty over the exact amount of the possible write-down was fuelling investor anxiety.
After the market closed Wednesday, Standard & Poor’s cut two of Toshiba’s credit and debt ratings by one notch each in response to the company’s announcement. S&P also placed the ratings on watch, suggesting they could be downgraded further, while a domestic agency also cut its rating.
SMBC Nikko Securities’ credit analysts Yutaka Ban and Kentaro Harada said in a report issued Thursday that the cut by Tokyo-based Rating and Investment Information in particular will “make it difficult” to raise cash through corporate bonds and other means. Further, the possibility that banks may become reluctant to lend money is “a bigger problem”.
Toshiba’s latest full-year forecast is net profit of 145 billion yen, up 45 per cent from an earlier estimate, on sales of 5.4 trillion yen.
But Tuesday it said it would release a revised earnings forecast as soon as possible to reflect the coming write-down.

Toshiba shares plunge further after loss warning

It has been besieged by problems, most notably a profit-padding scandal in which bosses for years systematically pushed subordinates to cover up weak financial results.

AFP, TOKYO: Toshiba shares plunged by double digits yesterday for a third straight session, as investors dumped the stock on expectations the company will take a massive loss on its US nuclear business. The troubled companys stock plummeted as much as 25.55 per cent at one pointvirtually the maximum fall permitted for the daybefore paring losses to close 16.97 per cent down at 258.7 yen. Over the three days, the companys market value declined by an approximately 781 billion yen ($6.70 billion). On Tuesday, the troubled conglomerate said that costs linked to the acquisition last year by its US subsidiary of a nuclear service company will possibly come to several billion US dollars and cause earnings to take a hit. The exact figure of the potential write-down is still being worked out, Toshiba President Satoshi Tsunakawa told reporters after the announcement. He hinted the company may seek support from financial institutions to boost capital, while local media Thursday reported it has begun talking with partner banks about such support. Toshiba shares closed nearly 12 per cent lower on Tuesday after media reports about the potential loss and dived more than 20 per cent on Wednesdaythe most they were allowed to fall that day. Those who were not be able to sell are selling today, Nobuyuki Fujimoto, senior market analyst at SBI Securities in Tokyo, told AFP on Thursday, referring to the previous days decline to the daily limit. But in a possible sign that the worst may be over, selling momentum faded somewhat during the day. Toshibas nuclear woes are the latest blow to the once-proud pillar of corporate Japan. Bigger problem It has been besieged by problems, most notably a profit-padding scandal in which bosses for years systematically pushed subordinates to cover up weak financial results. In an intensive overhaul, the company has been shedding businesses and announced the sale of its medical devices unit to camera and office equipment maker Canon. Investors had welcomed the makeover, and shares had climbed 77.3 per cent this year through Monday before the string of declines began. They have now reduced the gain for the year to just 3.5 per cent. Toshiba said the possible loss was related to the valuation of the purchase by subsidiary Westinghouse Electric of the nuclear construction and services business of Chicago Bridge Iron. Analysts have said uncertainty over the exact amount of the possible write-down was fuelling investor anxiety. After the market closed Wednesday, Standard Poors cut two of Toshibas credit and debt ratings by one notch each in response to the companys announcement. SP also placed the ratings on watch, suggesting they could be downgraded further, while a domestic agency also cut its rating. SMBC Nikko Securities credit analysts Yutaka Ban and Kentaro Harada said in a report issued Thursday that the cut by Tokyo-based Rating and Investment Information in particular will make it difficult to raise cash through corporate bonds and other means. Further, the possibility that banks may become reluctant to lend money is a bigger problem. Toshibas latest full-year forecast is net profit of 145 billion yen, up 45 per cent from an earlier estimate, on sales of 5.4 trillion yen. But Tuesday it said it would release a revised earnings forecast as soon as possible to reflect the coming write-down.