Things are not looking good for Toshiba at the moment as the company is being forced to slash 7,000 jobs and sell significant assets to stay afloat after an accounting scandal that involved $1.3 billion.
The job cuts are part of a vast overhaul that should see the company focusing its efforts in the nuclear energy and the computer chip field for the foreseeable future. Furthermore, Toshiba has highlighted that it is aiming to sell its television manufacturing plant in Indonesia.
This sale should see the rise of another round of job cuts, and with the planned 7,000, the overall amount could hit the 10,000 mark when everything is said and done.
Toshiba is also preparing itself for a huge 550 billion yen ($4.53 billion) loss when the fiscal year ends in March 2016. The huge profit dip has a lot to do with the company's restructuring costs and the planned sale of its Indonesian TV manufacturing plant.
If all goes according to its Revitalization Action Plan [PDF], Toshiba should be able to regain the trust of its shareholders and stakeholders, along with the transformation of the business back into something worth talking about in a good light. A very tall order, but with great possibility.
"By implementing this plan, we would like to regain the trust of all stakeholders including shareholders and transform ourselves into a robust business," the company said.
There's also plans to end the manufacturing of some products such as the Twin-Tub washing machine. The production will be transferred to a third-party entity, but the company did not state who will take up these duties.
Back in August, Toshiba confirmed that it had overstated profits by 155 billion yen during the fiscal year of 2008 to 2009. This forced an independent accounting probe of the company back in July, and what they found was no less than damaging.
We understand that Toshiba suffers from a governance that is very dysfunctional. Furthermore, the culture at the company discourages employees from talking out against their superiors since it could cause them to lose their jobs.
Since the announcement of the accounting incident in early April, Toshiba's stock has fallen by nearly 40 percent. The scandal has also brought to light a range of weaknesses in several aspects of Toshiba's business.
Several analysts have claimed that the restructuring of Toshiba should have happened a long time ago. For a company that has launched the first mass-market laptop device back in 1985, seeing its business fall, especially to smaller Asian companies with cheaper products, is a huge problem that needs to be rectified.
The sliding of the PC sector isn't helping things either, and unless Microsoft makes some big changes, it will likely continue. It's a tough economy still, and PCs continue to lose ground despite notable new launches. Some OEMs even decided to exit the PC business altogether.
Sony is one of the few PC manufacturers that have completely abandoned the sector due to abysmal sales. It would come as little surprise if Toshiba eventually decides to do the same thing in order to keep being competitive in other critical areas.
For now, Toshiba will be focused on reforming its financial base while promoting business management that puts emphasis on cash flow.
