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Toshiba Left with $3.5 Billion Loss in Third Quarter from Nuclear Write-Down: Nikkei

Toshiba Left with $3.5 Billion Loss in Third Quarter from Nuclear Write-Down: Nikkei
The Nikkei reported on Sunday that in the nine months through December, Japanese conglomerate Toshiba Corp probably suffered a group net loss of about 400 billion yen ($3.52 billion).
The company suffered loss of around 600 billion yen on a U.S. nuclear unit that came to light in late 2016 that resulted in goodwill impairment which constitutes a major portion of the total loss.
Toshiba lost a similarly significant 479.4 billion yen during the year-earlier period.
By selling part of its chip operations and taking other measures, the company will be able to keep the amount it owes from exceeding the value of its assets for the full year through March, Toshiba hopes.
Along with a full-year outlook, earnings for the April-December period will be announced on Toshiba on Tuesday. The cause of the losses, measures to avoid similar events and plans to rebuild its nuclear business are also expected to be explained by the company.
In late 2015, Toshiba acquired CB&I Stone & Webster, a U.S.-based nuclear plant builder, through U.S. subsidiary Westinghouse Electric and the loss comes from the write-down of goodwill of that U.S.-based nuclear plant building company.
Labour and materials costs at the company have been pushed up to levels far exceeding initial estimates by the dwindling global demand for nuclear power and poor project management.
At the time of acquisition, Toshiba overestimated the value of the company's projects, in addition to the above mentioned reasons.
Toshiba decided to book the premium as a group loss for Toshiba's nuclear operations and due to the overestimation of the above Toshiba decided to write down the premium it paid for the company which is essentially the difference between the price paid for acquisition and the net assets of Stone & Webster.
Toshiba plans to seek approval at an extraordinary meeting of shareholders to sell some of the new venture's shares to boost its capital and is trying to hasten the process of spinning off its semiconductor business.
Interest in buying the shares have been expressed by five groups, including a major foreign chipmaker and a fund, by the first deadline in early February.
Toshiba had 360 billion yen in capital by September. The value of its foreign currency-denominated assets is likely to be boosted by a weak yen for the full year.
The capital of the company would be boosted by the profit from brisk chip operations. Its shares in some listed subsidiaries are also planned to be sold by the Toshiba. The Japanese group had also acquired Landis+Gyr, the world's leading electric meter maker in 2011 and it is seen considering another goodwill write-down for Landis+Gyr also.
In the current fiscal year, the company's premium, which was at 143.2 billion yen at the end of September, would be devalued by Toshiba. However it is still not decided whether it will write off the entire value or part of it.

Christopher J. Mitchell

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