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Toshiba spared delisting after finally getting 2016 accounts approved

Back to the drawing board with Foxconn and WDC

By Chris Mellor, 10 Aug 2017

Auditors have finally signed off Toshiba's fiscal 2016 and Q1 '17 accounts but with a disputed qualification, so Tosh should avoid Tokyo Stock Exchange delisting on that account.

Net sales in FY2016 were ¥4.9tn ($44.6bn) with a net loss of ¥966bn ($8.8bn). The first quarter of its fiscal 2017 saw sales of ¥1.14tn ($10.4bn) and a net income of ¥50bn ($455m).

The dispute is over the timing of Toshiba's recognition in an accounting sense of its losses from its US nuclear power station-building operation, Westinghouse Electric. That firm is now in Chapter 11 bankruptcy.

Toshiba had been threatened with delisting if the accounts were not filed and is still at risk because it is under-capitalised and its shareholder equity is negative to the tune of ¥504bn ($4.6bn). Its corrective action is to raise cash by selling its memory business but Toshiba is in a convoluted legal dispute with Western Digital Corporation (WDC) over its right to do this. Toshiba needs to raise the cash needed by March 31, 2018, the end of its fiscal year. Read the background here.

Talks with a preferred bidding consortium, led by Japanese state-backed funds, and with participation from Bain Capital in the USA and Korea's SK Hynix, had stalled because of the WDC legal case and WDC's objection to competitor SK Hynix's inclusion.

But Toshiba is now talking again to Foxconn (Hon Hai Precision Industries) and WDC about the sale. ®

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