Friday, 18 August, 2017

Toshiba moves closer to avoiding delisting

Toshiba Corp is seen on a printed circuit board in this Toshiba reports long-delayed earnings, posts US$8.8b loss
Marta Holmes | 12 August, 2017, 01:32

Toshiba filed its delayed full-year results on August 10.

Toshiba's lucrative chip segment accounted for 35% of total net sales for the year, pulling in 1.7 trillion yen, or $15.56 billion, up 8% year-over-year from fiscal 2015.

However, PwC also issued a rare "adverse opinion" on the firm´s internal controls, saying losses at its now bankrupt US nuclear arm Westinghouse were not booked in a timely manner.

Auditor PricewaterhouseCoopers Aarata gave a "qualified opinion" on the financial statements, meaning it broadly endorsed the results.

If Toshiba reports negative net worth - liabilities exceeding assets - for a second consecutive year it would likely prompt a delisting.

But with a week left until the extended earnings deadline, the auditor still refused to approve the three-quarter figures, forcing Toshiba to delay the release of its earnings again.

Toshiba on Tuesday said its negative shareholder equity at the end of June was 504.3 billion yen.

While agreeing generally with the financial results of Toshiba, the sign off from PwC did come with a caveat.

Antitrust reviews in the U.S., Europe and China typically take at least half a year.

The embattled electronics firm posted a loss of $8.8bn (£6.7bn) for the last fiscal year.

"It's true that issues related to antitrust laws are hard, it is difficult", Tsunakawa said. That would have reduced its ability to raise money for its cash-hungry memory chip business, risking its competitiveness. The corporation's earnings forecast for fiscal 2017, before taking into account the sale of the chip unit, has its storage and device solutions business making up almost 40% of overall sales. "This is one of the reasons we made a decision to sell [the memory unit]".

Foreign investors seem to have confidence in Tsunakawa.

US hedge fund Greenlight Capital, led by David Einhorn, said in July that it added a new long position in Toshiba shares, saying it believes "the stock is worth closer to 400 yen".

In June, the company picked a consortium of state-backed Innovation Network Corp. of Japan, the state-owned Development Bank of Japan, U.S. investment fund Bain Capital and South Korean chipmaker SK Hynix Inc.as the preferred bidder for Toshiba Memory.

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