Toshiba drops as profit charge said to double on accounting
By Bloomberg
Toshiba Corp. fell the most in almost two months in Tokyo trading as the company’s writedown on past earnings from accounting irregularities was said to double.
The shares declined 2.7 percent, the most since May 15, to 412 yen as of the close in Tokyo trading. The stock has dropped 15 percent since the announcement of an accounting probe May 8. The writedown of past profits will rise to more than 100 billion yen ($816 million), about double the company’s previous estimate, a person familiar with the matter said July 4.
Toshiba has repeatedly widened the investigation after withdrawing its earnings forecasts for last fiscal year, canceling a year-end dividend and saying it had found irregularities related to “percentage of completion” accounting estimates. The maker of chips, nuclear reactors, appliances and notebook computers has said an internal probe also uncovered flaws in accounting at its PC and chip businesses.
“Management must consider taking responsibility if the amount of the writedown is more than 100 billion yen or 150 billion yen,” said Hiroyasu Nishikawa, an analyst at Iwai Cosmo Securities Co. “We are still waiting for the results of their accounting probe.”
At least eight analysts have suspended their ratings on the company’s shares amid uncertainty about the probe’s scope. The company initially said it was examining accounting at units for nuclear, hydroelectric, wind-power equipment, air-traffic control and railway systems, then widened the probe to include personal computers and other businesses.
The company has named two lawyers and two certified public accountants to an expanded third-party committee to examine the accounts. Koichi Ueda, a former investigator with Tokyo District Public Prosecutor’s Office, will head the committee, Toshiba said in May.
Prior to the announcement of an accounting probe, Toshiba had projected operating income of 330 billion yen on sales of 6.7 trillion yen in the year ended March.
A June 25 estimate of a 55 billion-yen reduction in profit applies to the five fiscal years ending in March 2014. The company has given no estimate for the year ended this March.