Toshiba Slashes 7,800 Jobs Amid $4.5 Billion Annual Loss
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On Monday, Japanese technology conglomerate Toshiba Corp TOSYY put its healthcare division up for sale in a move that has the company seeking outside help after seeing a $4.5 billion loss for the current business year.
TOSYY stock was hit hard by the news, with shares plunging over 9% and losing more than half its value since this past March.
Toshiba's healthcare unit only generated less than one-tenth of its total sales, and its diagnostic scanners, used to help narrow the causes of an injury or illness, are seeing intense competition from companies like General Electric Co GE , Philips NV PHG , Siemens AG SIEGY , and Samsung Electronics SSNLF .
Other reasons for the company's large losses include intensifying issues within the consumer electronics business as a whole and tough market conditions for Toshiba's nuclear and semiconductor businesses.
As a result, Toshiba said that it would be cutting 7,800 jobs as a part of a restructuring plan-6,800 jobs in its consumer electronics and appliances unit and 1,000 at its headquarters-which amounts to four percent of its total workforce. Most employees who were let go will leave the company, but some may be able to find other jobs within Toshiba's ranks.
The job cuts are also an effect of an accounting scandal Toshiba endured this past summer, when the company declared $1.2 billion in false profit.
"We admit our steps toward restructuring were behind the curve," Toshiba President Masashi Muromachisaid on Monday. "The damage wouldn't be this large if we had been able to implement overhaul plans much sooner." Mr. Muromachi continued, saying that Toshiba would "focus on businesses that can generate profits" and would "consider withdrawals from unprofitable ones if a turnaround is difficult."
In the end, Toshiba's $4.5 billion loss reflects the challenges the conglomerate will need to tackle as it attempts to revamp all of its divisions including its struggling TV segment, which it plans to end all sales outside of Japan and license its brand overseas.