Toshiba to become Threeshiba – company split to spur growth as strife persists

One company for devices, one for office kit, another for infrastructure, batteries & tech services, Kioxia stake to be sold


Japanese industrial giant Toshiba has announced it will divide into three companies, and that its governance needs a thorough overhaul.

Toshiba itself will persist in the form of Toshiba Tec Corporation – a vendor of printers, barcode kit, and point of sale tech. The firm will also sell the 40 per cent stake it holds in memory-maker Kioxia, which Toshiba spun out in 2019. Proceeds will be disbursed to shareholders.

Another of the companies has been dubbed "Device Co." and will inherit Toshiba's semiconductor business – both finished products and manufacturing – and the hard disk drive business. Device Co. should start life with annual revenue of around $6.7 billion.

The third business, provisionally monikered "Infrastructure Service Co.", gets to play in power generation, transmission and distribution, renewable energy, energy management, systems solutions for public infrastructure, railways and industry, building energy-saving solutions, and IT solutions for government agencies and private companies. And batteries, too. Infrastructure Service Co. has been positioned as just the sort of partner governments need as they set about decarbonising their economies and should have around $18 billion of annual revenue once separated from Toshiba.

Dynabook Portégé X30L-G

Toshiba formally and finally exits laptop business

READ MORE

Toshiba says it has made these changes to let each business "significantly increase its focus and facilitate more agile decision-making and leaner cost structures".

Satoshi Tsunakawa, Toshiba's interim CEO, president, and chair, said the change is an example of Toshiba – yet again – getting ahead of global trends.

"We are convinced that the business separation is attractive and compelling; it will unlock immense value by removing complexity," he said, adding "it enables the businesses to have much more focused management, facilitating agile decision making, and the separation naturally enhances choices for shareholders."

The bushel of statements Toshiba issued to announce the split makes a few mentions of the fact the new structure was recommended by a Strategic Review Committee (SRC) appointed in May 2021, after the company rebuffed a takeover attempt by private equity firm CVC.

Toshiba's then-president and CEO Nobuaki Kurumatani stood down once CVC had been repelled, and Toshiba is yet to appoint a permanent successor. The decision to split the company doesn't necessarily relieve pressure to find a new boss, as the Committee also recommended Toshiba's board "undertake immediately seven clearly defined commitments to enhance corporate value – including share buybacks and asset dispositions – during the preparation phase of the Separation Plan".

"Please know that this is by no means the end of the work of the SRC," reads the Committee's statement. "We shall continue to oversee the preparation of the Separation Plan until the shareholders vote on it at the proposed EGM in the first quarter of next calendar year." Completion of the plan is scheduled for 2023.

It's not just the SRC calling for change at Toshiba. Also revealed [PDF] last Friday were the findings of a Governance Enhancement Committee set up in the wake of the ousting of board chair Osamu Nagayama over a corruption scandal.

The Governance Enhancement Committee calls for a thorough overhaul of Toshiba's governance, including appointment of leaders who understand its concepts and practise them. The Committee also called for Toshiba to reduce dependence on regulators and Japan’s Ministry of Economy, Trade and Industry.

Toshiba's been embroiled in strife of this sort since a 2015 accounting scandal, which was followed further problems in 2017 when massive losses in its nuclear power subsidiary led to further executive resignations. Even Kioxia has had troubles, with a stalled IPO bringing further pain.

The company tried to position last Friday's slew of announcements as a new beginning, with Q2 2021 results showing six per cent year-over-year-revenue growth helping things along.

But one of the company's biggest shareholders – Effissimo Capital Management – has signalled it may not support the restructuring plan despite being one of the loudest voices calling for Toshiba to change its ways. ®

Similar topics

Broader topics

Narrower topics


Other stories you might like

  • Ex-Qualcomm Snapdragon chief turns CEO at AI chip startup MemryX

    Meet the new boss

    A former executive leading Qualcomm's Snapdragon computing platforms has departed the company to become CEO at an AI chip startup.

    Keith Kressin will lead product commercialization for MemryX, which was founded in 2019 and makes memory-intensive AI chiplets.

    The company is now out of stealth mode and will soon commercially ship its AI chips to non-tech customers. The company was testing early generations of its chips with industries including auto and robotics.

    Continue reading
  • Aircraft can't land safely due to interference with upcoming 5G C-band broadband service

    Expect flight delays and diversions, US Federal Aviation Administation warns

    The new 5G C-band wireless broadband service expected to rollout on 5 January 2022 in the US will disrupt local radio signals and make it difficult for airplanes to land safely in harsh weather conditions, according to the Federal Aviation Administration.

    Pilots rely on radio altimeter readings to figure out when and where an aircraft should carry out a series of operations to prepare for touchdown. But the upcoming 5G C-band service beaming from cell towers threatens to interfere with these signals, the FAA warned in two reports.

    Flights may have to be delayed or restricted at certain airports as the new broadband service comes into effect next year. The change could affect some 6,834 airplanes and 1,828 helicopters. The cost to operators is expected to be $580,890.

    Continue reading
  • Canadian charged with running ransomware attack on US state of Alaska

    Cross-border op nabbed our man, boast cops and prosecutors

    A Canadian man is accused of masterminding ransomware attacks that caused "damage" to systems belonging to the US state of Alaska.

    A federal indictment against Matthew Philbert, 31, of Ottawa, was unsealed yesterday, and he was also concurrently charged by the Canadian authorities with a number of other criminal offences at the same time. US prosecutors [PDF] claimed he carried out "cyber related offences" – including a specific 2018 attack on a computer in Alaska.

    The Canadian Broadcasting Corporation reported that Philbert was charged after a 23 month investigation "that also involved the [Royal Canadian Mounted Police, federal enforcers], the FBI and Europol."

    Continue reading

Biting the hand that feeds IT © 1998–2021