Japanese tech giant Toshiba is forced to restructure itself following enormous losses, and now it is known that some 6,800 people will lose their jobs.
The company is into many businesses, from laptop building, television to nuclear energy. The people losing their jobs work in the electronic devices department. The plans to restructure the company were unveiled after Toshiba overestimated its profit expectancies for a six-year period.
The scandal, which escalated when it was unveiled that certain subordinates faked financial results to show more profit, has led to the resignation of the company’s president.
Toshiba plans to sell its TV production plant, as well as its washing machine plant – located in Indonesia. A Hong Kong-based company Skyworth will allegedly buy the plants. The company is also looking for investors for its health-related business.
Among those 6,800 workers, some will retire early.
Toshiba was formed in 1875, and in 1985 it has built its first laptop. Currently it employs almost 200,000 people. The company’s shares have dropped 40 per cent since April 2015.
The cause of many problems also lies in the tsunami which hit Japan in 2011, and which led to the disaster in the Fukushima power plant. Toshiba was in charge of the plant.
Toshiba said it had not yet fully calculated the impact of the nuclear disaster on its books.
The latest earnings projection means Toshiba is sinking into its second straight year of red ink, after racking up a nearly 38 billion yen (£209 million) loss for the fiscal year that ended in March.
Senior market analyst at Spreadex, Connor Campbell, has compared Toshiba to Tesco, another company that was in a similar position. Looking at how Tesco managed its problems, Campbell does not see a bright future in front of Toshiba. "It’s a situation remarkably similar to Tesco’s; both companies hit by huge accounting scandal, both in sectors hurt by price-wars, both with an arduous and costly path ahead," he says. "Not that that will be much comfort to Toshiba given how poorly Tesco has performed in the aftermath of its own issues."