Death By a Thousand Cuts: Toshiba to Sell Majority of its Semiconductor Business

[Raevenlord]

Toshiba may not be dead in the water just yet, but news are dire for the company. After the company confirmed it was looking to spin-off its NAND production business so as to sell a minority, 20% stake for much-needed liquidity in the face of amounting debt and multiple management mistakes, reports now announce a much more aggressive stance from the company. It is now apparently looking to sell a majority stake (60%) on the spin-off, in the face of escalating costs and dwindling prospective chances.





This comes in the wake of recent snags and strategic mistakes for the company, as we've previously reported - such as the $1.2 billion dollar accounting "misstated" earnings, which created difficulties for the company to refinance itself in the Tokyo Stock Exchange, and the gross miscalculation on the amount of debt of the CB&I Stone and Webster company that Toshiba acquired so as to facilitate its U.S.-based Westinghouse Electric nuclear plant subsidiary investment. This "miscalculation", where Toshiba considered the "goodwill" booking charges at $87 million and which were recently restated at a roughly-defined "several billion U.S. dollars." now stand at an eye-watering $6.3 billion.

For Toshiba, NAND flash production is strategically important because it enables the company to produce all types of storage devices in-house, allowing it to keep total production verticality, from product development, inception and design, all the way towards parts manufacturing and assembly - which leads to higher margins on each product sold. And it has to be said: selling of your most profitable business may be a short-term need, but it's surely a long-term risk. And with only a 40% stake in its most profitable business remaining, Toshiba stands to face difficult times.

The company is currently one of the world's largest NAND producers, and there are (as always) sharks hovering around the company. Tsinghua Unigroup, one of the branches of Chinese state-controlled Tsinghua University, has been listed as a possible investor. If successful in this investing effort, this would mean that Tsinghua (and through it, the Chinese government) would be able to achieve in-house semiconductor production. And this investment is looking ever more likely with Toshiba itself admitting to being wary of an investment from its partner WD, whose intervention could spark a long regulatory approval process, prospectively killing the immediacy of Toshiba's predicament.

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[ssdpro]

Where OCZ goes pain follows. Toshiba might have had some warts pre-ocz takeover, but once inside the host OCZ spread like wildfire and those warts grew until they burst in a yellowish-green pungent mess.

 

[R-T-B]

Where OCZ goes pain follows. Toshiba might have had some warts pre-ocz takeover, but once inside the host OCZ spread like wildfire and those warts grew until they burst in a yellowish-green pungent mess.

Sticky.

 

[FordGT90Concept]

TL;DR: Fukashima Daiichi meltdown wrecked Toshiba.

 

[diatribe]

In that accounting statement above it mentions "goodwill". Can someone explain a little more about what that means in context to the companies assets.

 

[FordGT90Concept]

Writing off the loss from Daiichi meltdown. They grossly under reported it initially. When they had to balance the books later, they couldn't hide it any more.

 

[The Von Matrices]

Writing off the loss from Daiichi meltdown. They grossly under reported it initially. When they had to balance the books later, they couldn't hide it any more.

To be clear, the loss was related to cancellation/delay of new reactors across the world (designed/built by Westinghouse) as the result of renewed public opposition to nuclear power, not the meltdown itself.

In that accounting statement above it mentions "goodwill". Can someone explain a little more about what that means in context to the companies assets.

When one company buys another, "goodwill" is the amount of money the buyer pays over what the purchased company is actually worth, usually in terms of market capitalization.

 

[bonehead123]

And just exactly how much "goodwill" does it take to hide billions of dollars of losses from the government and everyone else ?

If absorbing losses from buying a dying company/product line means that you have to later sell your entire core business to cover said losses, then something is SERIOUSLY wrong in their accountant's office....

as with most things in that part of the world, somethin smells REALLY, REALLY fishy here

 

[FordGT90Concept]

To be clear, the loss was related to cancellation/delay of new reactors across the world (designed/built by Westinghouse) as the result of renewed public opposition to nuclear power, not the meltdown itself.

I was confused because there's two Westinghouse Electric businesses: Corporation which is now CBS Corporation (yes, the channel) and Company which is the supplier of nuclear reactors. That said, that's over simplifying things.


Toshiba's CEO was forced to resign in 2015 because they overstated their profits at Westinghouse:
http://in.reuters.com/article/us-toshiba-accounting-stocks-idINKCN0PV0B620150721

In 2015, Toshiba acquired CB&I Stone & Webster Inc. which is a nuclear power station construction company:
http://www.businesswire.com/news/home/20151027006999/en/Westinghouse-Acquires-CBI-Stone-Webster

In 2016, Toshiba was forced to write-down billions in losses because their projects in the USA were over time and over budget, CB&I was over valued, and Westinghouse in general was mismanaged:
http://www.reuters.com/article/us-toshiba-loss-idUSKBN15R01Z

Which brings us to today: Toshiba is selling their NAND business to try to raise capital to keep operating.

"Death by a thousand cuts" seems legit.

 

[eidairaman1]

So much for Sattellite Brand and I recommending their SSDs. Smh, stupid asses