Company - - Dec 29,2016
Toshiba’s shares slumped heavily for the third consecutive day as devastated investors have wiped off $6.6 billion of the company’s market value.
The Japanese multinational’s dream of becoming a nuclear energy leader is turning out to be a nightmare since it warned of going through huge losses tied to its 2015 acquisition of a US nuclear construction business.
More than 40 percent of its total value has now been wiped off since December 26, the day when the firm’s chairman apologized for its decision of purchasing the US nuclear construction firm. Toshiba’s shares went down by 12 percent on December 26, 20 percent on December 27 and were down by 26 percent at one stage on Thursday but later regained some of those damages to close at 17 percent low.
Toshiba’s credit rating has also been marginally downgraded by Moody’s and S&P Global Ratings. All this started when Satoshi Tsunakawa, Toshiba’s CEO, announced that the company will lose billions of dollars in its US nuclear business deal. He added that they are still trying to calculate the exact figures that the company is anticipated to lose.
Toshiba had suffered a huge blow of $1.2 billion in an accounting scandal when it decided to step into the nuclear business and acquired CB&I Stone & Webster at the end of 2015. Following this scandal, Toshiba’s shares had dived and it reported a loss of 400 billion yen ($3.9 billion) for 2015. This also led to a major reshuffle within the company’s administration.
Toshiba recovered, somewhat, following the reshuffle as it reported net earnings of 115 billion yen ($977 million) in the first six months of the current financial year. But the recent downturn has raised major concerns for the company.
Toshiba’s investment into nuclear services business is lesser known but not new as it brings about a third of its revenue.