Why Toshiba Is Suing Western Digital
Why Toshiba is suing its partner
Toshiba (TOSBF) announced on June 28, 2017, that it is filing a lawsuit against its partner, Western Digital (WDC). The Japanese conglomerate is claiming 120 billion yen (~$1.1 billion) in damages. Toshiba is accusing Western Digital of interfering with the sale of Toshiba’s semiconductor business.
The tech giant wants to raise close to $20 billion by selling its memory chip division to a consortium of Korean, US, and government-backed Japanese investors. Western Digital is opposing this deal, as it has a stake in the business.
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Why Toshiba needs to sell the division
The struggling Japanese company is in dire need of funds. Earlier this year, Toshiba said its future may be in doubt. The company’s computer sales have dwindled due to competition from Hewlett-Packard (HPQ) as consumers increasingly prefer smartphones over desktops and laptops. Smartphones are increasingly featuring computer-like functions.
Toshiba’s revenues have been steadily falling over the last four fiscal years. The chart above shows the company’s steep drop in its bottom line.