Japanese technology giant Toshiba Corp.’s last-gasp strategy for staying afloat — selling its prized computer chip operations — may buy the company time but is no cure-all.
TOKYO — Japanese technology giant Toshiba Corp.’s last-gasp strategy for staying afloat — selling its prized computer chip operations — may buy the company time but is no cure-all.
The 140-year-old Japanese energy and electronics colossus will be bereft of its most profitable and promising businesses and still entangled with the nuclear units that brought about its downfall.
Dogged by misfortune and mismanagement, Toshiba, whose roots date to the age of telegraphs and arc lamps in the 1880s, has warned of “substantial doubt about the company’s ability to continue as a going concern.”
In hindsight, the Tokyo-based company’s first big misstep was its 2006 purchase of the U. S. nuclear unit of Westinghouse, which filed for bankruptcy protection last month.
But a massive accounting scandal and accounts from former Toshiba employees suggest more pervasive problems within its management.
Threatened with delisting of its shares, Toshiba reported a 950 billion yen ($8.4 billion) net loss for the fiscal year ended March, although the results were released without its auditors’ approval.
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FROM TRIUMPH TO CATASTROPHE
Toshiba’s ascent paralleled Japan’s rise as an industrial power. One of its founders, Ichisuke Fujioka, the son of a samurai, brought the incandescent light bulb to Japan and forged an alliance with General Electric.
Toshiba developed Japan’s first radar and microwaves, electric rice cookers and laptop computers. It also invented flash memory, the ubiquitous computer chips that store and retain data for digital cameras, smartphones and all sorts of other gadgets and now are its most profitable business.
The company got into the nuclear business in the 1970s, decades before its $5.4 billion purchase of Westinghouse from British Nuclear Fuels Ltd.
At the time, the U. S. government was encouraging construction of reactors and China was embarking on a massive expansion of atomic energy, but analysts said Toshiba was paying too much.
“I’ d like to make this the first success story, ” then-Chief Executive Atsutoshi Nishida declared, alluding to the dismal track record of other high-profile Japanese acquisitions, such as Mitsubishi Estate’s purchase of Rockefeller Center and Sony’s of Columbia Pictures.
Catastrophe struck in March 2011, when three reactors at the Fukushima Dai-ichi nuclear plant sank into meltdowns after a tsunami devastated much of Japan’s northeastern coast.
Two of the six reactors there were built by Toshiba.
That marked a turning point for the industry as some nations stopped building new nuclear plants. Six years on, most reactors in Japan are idled, awaiting stricter safety checks.
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ACCOUNTABILITY
Toshiba’s troubles aren’ t confined to its nuclear business.
Even before 2011, Muneo Morokuzu, a retired specialist on nuclear fuel cycles, and several other former Toshiba employees interviewed by The Associated Press said they had noticed an erosion of accountability at Toshiba.
Morokuzu joined the company in 1970 and took pride in what he calls “a spirit of humanity” among Toshiba workers.
