On Monday, Japanese electronics company Toshiba said that it would book a record net loss this year. The company is planning to cut about 5% of its work force in consumer electronics, as it continues to deal with the aftermath of a $1.3 billion accounting scandal. For now, the troubled company is focusing its efforts on computer chips and nuclear energy.
Analysts are now questioning whether or not the failing company will be able to return to its once dominant form, especially with a reduced emphasis on consumer electronics. With declining profit margins in the computer chip industry and a phase out of nuclear power since the 2011 Fukushima disaster, Toshiba clearly has its work cut out for it.
Shares for Toshiba have fallen by 40% since the company’s management first disclosed their accounting problems in April. The company later admitted that it has been overstating its profits since March 2009. Toshiba has since started restructuring following an investigation that revealed the company was in poor financial health.
On Monday, Toshiba stated that restructuring will push its losses for the year to more than $4.5 billion. This loss is even greater than the company incurred at the peak of the global financial crisis. The company is planning to cut 6,800 more consumer electronics jobs, bringing the total of the number of jobs axed this year to more than 10,000. Toshiba is also going to sell off its Indonesian television assembly plant, putting an end to its overseas television production.
CEO Masashi Muromachi stated, “By implementing this plan, we would like to regain the trust of all stakeholders and transform ourselves into a robust business.”
Over the past decade, Japanese electronics companies have lost market share to companies like Apple and South Korea’s Samsung. Meanwhile, Toshiba’s domestic counterparts like Sony and NEC have also announced similar job cuts. Additionally, Sharp is trying to obtain funds to rescue its dying display business.
In downsizing its consumer electronics operation, Toshiba will place more emphasis on its nuclear power and computer chip units. In the nuclear power industry, Toshiba will face stiff competition from Chinese and Russian companies who can typically offer nuclear reactors at cheaper prices than Japanese firms. Meanwhile, profit margins from computer chips have fallen as smartphone sales have slowed.