February 19, 2018

Toshiba Gains as Auditor Finally Gives Tick of Approval

12 August 2017, 12:07 | Kenneth Drake

Toshiba Corp is seen on a printed circuit board in this

Toshiba wins auditor sign-off likely avoiding delisting for now

Toshiba Corp has likely avoided immediate delisting after its auditor signed off on its financial results albeit with criticism of its governance, yet its future remains uncertain with no progress in talks to sell its chips unit for much-needed cash.

The results showed Toshiba made a net loss of 966 billion yen ($8.8 billion) in the year ended March 31, on sales of 4.9 trillion yen.

Toshiba had been debating with PwC Arata over when the Japanese company realized massive losses on a US nuclear power unit.

Auditor PricewaterhouseCoopers Aarata gave a "qualified opinion" on the financial statements, meaning it broadly endorsed the results. The company said it was intending to swing back to profitability in the current fiscal year, but getting itself out a negative net worth by March 2018 would not be easy, analysts warned.

There were growing worries that Toshiba may not make this morning's deadline to supply financial statements for the fiscal year ended in March, as it was at odds with its auditor over multi-billion dollar losses at Westinghouse. Its operating income came in at 270 billion yen, also unchanged.

An auditor endorsement may remove one less headache for Toshiba as it seeks to close the memory chip unit deal that has stalled due to disagreements between members of the main bidding groups.

Antitrust reviews in the U.S., Europe and China typically take at least half a year.

The legal dispute between Toshiba and Western Digital is scheduled to be examined by an global court of arbitration between September and October with the process likely to take a year or more.

"The demand for [memory chips] is high at the moment", Tsunakawa said, "but it is a volatile market and we do not know if this will continue".

Foreign investors seem to have confidence in Tsunakawa.

Toshiba is the world's second-largest chip manufacturer.

USA hedge fund Greenlight Capital, led by David Einhorn, said in July that it added a new long position in Toshiba shares, saying it believes "the stock is worth closer to 400 yen".

That has unnerved Toshiba's preferred bidder group, a consortium including Japanese government-backed funds, private equity firm Bain Capital LP and South Korean chip maker SK Hynix Inc.

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