Toshiba completes agreement with Skyworth
On December 21, 2015, Toshiba (TOSYY) announced that it reached an agreement with China-based Skyworth on the sale of PT Toshiba Consumer Products Indonesia, its Indonesian manufacturing base for TVs and twin-tub washing machines. The settlement and transfer should be completed by March 2016. This agreement is a part of the structural reforms undertaken by Toshiba.
The sale price is expected to be $25 million. Peer companies Hitachi, Panasonic, and Sony (SNE) have also restructured their consumer electronics business to focus on more profitable businesses such as image sensors and auto parts. Earlier this year, Hewlett-Packard (HPQ) also spun off its printer business.
Restructuring should have occurred years ago: Toshiba CEO
On December 21, Toshiba also announced that it will lay off 6,800 employees to mitigate its losses and streamline its business in the chip industry and nuclear energy segment. Regarding its restructuring program, Toshiba’s management stated, “By implementing this plan, we would like to regain the trust of all stakeholders including shareholders and transform ourselves into a robust business.”
Masashi Muromachi, Toshiba’s CEO, noted, “We admit our steps toward restructuring were behind the curve….Toshiba should have done across-the-board restructuring years ago, but it’s not too late.”
In April 2015, Toshiba was hit with one of the biggest accounting scandals in Japan’s history in which the firm admitted that it had overstated profits by $1.28 billion in 2008–2009. In order to focus on corporate governance, Toshiba noted it would bring in more outside directors, including a former Supreme Court justice.
Hewlett-Packard (HPQ) constitutes 1.6% of the iShares S&P Global Information Tech ETF (IXN) and 3% of the First Trust Mega Cap AlphaDEX Fund (FMK). Micron (MU) and SanDisk (SNDK) Toshiba’s competitors in the semiconductor segment.