Toshiba Inc., a company that symbolized Japan’s supremacy in the electronics industry, has delisted, ending its 74-year association with the Tokyo Stock Exchange.
Can you recall a time when you owned at least one household item, such as a TV, your first computer, a speaker system, or any other electronic device made by Toshiba?
Then, why, did one of the most well-known industrial names in Japan experience such a dramatic decline in popularity? It all began in 2015, when it was discovered that numerous divisions had engaged in accounting malpractices, many involving upper management.
Events Throughout the Year
Over a period of seven years, Toshiba presented false information by exaggerating its profits by $1.59bn (£1.25bn). Five years later, in 2020, Toshiba discovered numerous deviations in their accounting system. There were also accusations concerning corporate governance and the process by which investor decisions were made.
As a result of Toshiba’s strategic asset status, the Japanese Trade Ministry and electronics giant collaborated to suppress the goals of foreign investors, according to a 2021 investigation. Experts at the time claimed that this issue affected not just Toshiba, but also the Japanese stock market, causing overseas investors to hesitate when considering purchasing Japanese stocks.
Toshiba announced in late 2016 that it would assume responsibility for several billion dollars related to the construction of a nuclear power plant, which it had acquired a year earlier from the US company Westinghouse Electric. Three months after Westinghouse declared bankruptcy, Toshiba faced over $6 billion in liabilities and the potential loss of its nuclear business.
It sold various divisions, including white goods, medical systems, and mobile phones. Then, due to a disagreement with a partner, Toshiba was compelled to list its chip division, Toshiba Memory, for sale. The transaction was delayed for several months which resulted
74 Years of Toshiba in the Books
During the rise in technology and innovation among many rival companies, Toshiba was experiencing difficulties and had to sell several assets to increase their cash flow. These sales allowed Toshiba to gain $5.4 billion in cash by the end of 2017. The company’s investors were primarily overseas, and this substantial investment saved Toshiba from a severe delisting. Consequently, these overseas investors gained significant influence over the company’s future direction.
Around June 2022, Toshiba received a total of eight buyout proposals. Earlier this year, the company announced it would be acquired for $14 billion by a consortium of Japanese investors led by the government-backed Japan Investment Corp (JIC).
Although the strategy of Toshiba’s new owners for the company’s turnaround remains unclear, the departing chairman has indicated that a focus will be on high-margin digital services. Japan Industrial Partners (JIP) has had success in disentangling business units from major manufacturers, including the laptop division of Sony and the camera division of Olympus.
After acquiring Sony’s Vaio laptop division in 2014, JIP helped the business achieve sales records in the past year. However, Toshiba is a much larger entity, and the stakes are high. Approximately 106,000 people are employed by Toshiba, with some roles being critical to national security.
Toshiba, you will be missed.
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