Scandal-hit Toshiba cuts 6800 jobs, sells Indonesia plant, sees annual loss of $4.5 billion
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Scandal-plagued Japanese manufacturer Toshiba Corp. is cutting 6,800 jobs after projecting a net loss of 550 billion yen ($4.5 billion) for the fiscal year through March 2016.Toshiba said Monday it will slash the jobs in its personal computer, video product and consumer electronic businesses.
The job cuts equal about 3 per cent of Toshiba’s overall employees. It is also selling its TV plant in Indonesia.Toshiba, which also makes nuclear power plants, has repeatedly apologized after acknowledging it had systematically doctored its books over several years to inflate profits by 152 billion yen ($1.3 billion).Officials have said that mangers set unrealistic earnings targets, under the banner of creating a big “challenge,” and subordinates faked results.
The scandal at one of the nation’s top brands highlights how Japan is still struggling to improve corporate governance, despite efforts to beef up independent oversight of companies.Toshiba said the job cuts in Japan will be by early retirement, but a significant number of overseas jobs will also be involved and steps will vary by each nation. It did not immediately have a detailed regional breakdown.Earlier this year, Toshiba said it is selling facilities for making computer chips related to image sensors to Sony Corp.Toshiba is also in trouble because it operates and is decommissioning, with Hitachi and other companies, the Fukushima Dai-ichi nuclear power plant, which went into meltdowns after the March 2011 tsunami.
Toshiba said it had not yet fully calculated the impact of the nuclear disaster on its books.The latest earnings projection means Toshiba is sinking into its second straight year of red ink, after racking up a nearly 38 billion yen ($312 million) loss for the fiscal year that ended in March.Japanese media reports said the loss forecast for this fiscal year would be a record for Toshiba, surpassing the massive losses during the Lehman financial crisis.
Questions & Answers
Q.What is the primary reason behind Toshiba's decision to cut jobs and sell assets?
What is the primary reason behind Toshiba's decision to cut jobs and sell assets?
Toshiba is taking these steps after projecting a significant net loss for the fiscal year. This follows a scandal where the company admitted to systematically inflating its profits over several years.
Q.Which specific business areas are most affected by the job cuts?
Which specific business areas are most affected by the job cuts?
The job cuts are primarily focused on Toshiba's personal computer, video product, and consumer electronic businesses. Approximately 6,800 positions will be eliminated from these sectors.
Q.Has Toshiba experienced financial losses in previous periods?
Has Toshiba experienced financial losses in previous periods?
Yes, this projection means Toshiba is heading for its second consecutive year of losses. The company recorded a nearly 38 billion yen loss in the fiscal year that concluded last March.
Q.What other significant financial challenges is Toshiba facing, beyond the accounting scandal?
What other significant financial challenges is Toshiba facing, beyond the accounting scandal?
Toshiba is also grappling with the financial implications of the Fukushima Dai-ichi nuclear power plant. The company has not yet fully calculated the disaster's impact on its financial records.
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