The demise of this iconic company stems from a series of setbacks that began in 2015, uncovering accounting malpractices and sparking a chain of events that would ultimately redefine Toshiba’s fate.

In 2015, the revelation of accounting irregularities sent shockwaves through Toshiba’s reputation.

The company, once celebrated as a paragon of Japan Inc, had been overstating its profits by a staggering $1.59 billion for seven years.

The malpractices implicated top management across multiple divisions, tarnishing the image of a corporate giant.

The year 2020 brought further woes as additional accounting irregularities surfaced.

Allegations regarding corporate governance and questionable shareholder decision-making processes further eroded trust in Toshiba.

A 2021 investigation exposed collusion between Toshiba and Japan’s trade ministry, revealing an effort to suppress the interests of foreign investors.

This not only damaged Toshiba’s credibility but also cast a shadow over Japan’s entire stock market, leaving foreign investors hesitant to engage with Japanese stocks.

The financial strain intensified when, in late 2016, Toshiba shouldered several billion dollars in liabilities related to the construction of a nuclear power plant by its US unit, Westinghouse Electric.

The subsequent bankruptcy of Westinghouse in 2017 left Toshiba facing the collapse of its nuclear business and a staggering $6 billion in liabilities. In a bid to stay afloat, Toshiba was forced to divest various businesses, including mobile phones, medical systems, and white goods.

Amid a climate where technology companies were investing heavily in innovation, Toshiba found itself selling off prized assets, most notably its chip unit, Toshiba Memory.

The sale, initially delayed due to disputes with partners, highlighted the company’s struggle to generate cash and maintain competitiveness.

In 2017, a lifeline arrived in the form of a $5.4 billion cash injection from overseas investors, preventing a forced delisting.

However, this influx of capital meant that activist shareholders gained more influence over the company’s direction.

Protracted battles ensued over whether Toshiba should split into smaller entities, prompting the establishment of a committee to explore the possibility of taking the company private.

By June 2022, Toshiba had received eight buyout proposals, and earlier this year, a group of Japanese investors led by the state-backed Japan Investment Corp (JIC) confirmed a $14 billion takeover.

While the new owners’ plans to revitalize Toshiba remain unclear, the outgoing chairman has indicated a focus on high-margin digital services.

Japan Investment Corp (JIC) has a track record of successfully carving out businesses from major manufacturers, including Sony’s laptop division and Olympus’s camera unit.

Notably, its acquisition of Sony’s Vaio laptop business in 2014 contributed to the unit achieving record sales in the following years.

However, Toshiba presents a much larger challenge, given its vast workforce of around 106,000 employees and operations deemed critical to national security.

 

As Toshiba concludes its 74-year history with the stock exchange, the company’s story serves as a cautionary tale of the perils that even industry giants can face when corporate governance falters and financial missteps abound.

 

 

Last Updated: 20 December 2023