TOKYO -- Toshiba will issue Tuesday its first-ever warning about its viability as a going concern, acknowledging uncertainty over its revival strategy and future in the face of massive nuclear-related losses, The Nikkei has learned.
The warning will be included in the earnings announcement for the nine months ended December. The Japanese electronics giant is expected to book an impairment charge of 600 billion yen to 700 billion yen ($5.26 billion to $6.14 billion) on U.S. nuclear operations, leaving it with a group net loss in the high-400 billion yen range.
The loss could wipe out shareholders' equity and send Toshiba's net worth into the red. Though Toshiba is taking steps to ensure it ends the fiscal year with more assets than liabilities, including spinning off and selling part of its memory business, its financial situation remains extremely precarious. The company closes its books in March.
The charge has raised strategic questions as well, underscoring the risks involved in a business Toshiba had sought to cultivate into a mainstay on a par with its chip operations. Demand for new nuclear-power facilities is slumping worldwide, and safety measures are growing costlier. While the company plans to seriously consider overhauling the business, it concluded that a warning to investors was necessary at this time.
Officials are expected to explain the reasons behind the loss at Tuesday's earnings briefing. If liabilities exceed assets at fiscal year-end, Toshiba will be demoted from the Tokyo Stock Exchange's first section to the second section. It could have a tougher time raising money from banks and other sources as well.
Toshiba will also announce as early as Tuesday an investigation into whether any improprieties were involved in the massive loss at its nuclear business. If anything inappropriate is found, the probe will examine if, and to what extent, top management and the company as a whole were involved.