Toshiba to incur loss of $1 billon after tax related to sale of its chip unit

Toshiba, which separated out its chip unit in April, said it was being taxed on the basis of assets and liabilities of the transferred business at the time of the split

By: Reuters | Tokyo | Published: October 23, 2017 2:20 pm
Toshiba, Toshiba memory chip, Toshiba chip sale, Toshiba loss, Toshiba profit, Toshiba liability, Toshiba chips, Toshiba assets, Japan business, Japan company, Tokyo news The forecast, however, do not reflect expected gains for Toshiba from the 2 trillion yen (.6 billion) sale of its chip unit. File Photo

Embattled Japanese conglomerate Toshiba Corp said on Monday it expected to slide to a net loss of nearly $1 billion this year after calculating taxes related to the sale of its prized chip unit.

Toshiba, which separated out the unit in April as a prelude to a sale, said it was being taxed on the basis of assets and liabilities of the transferred business at the time of the split. The latest forecasts, however, do not reflect expected gains from the 2 trillion yen ($17.6 billion) sale, as the deal is to receive regulatory approval.

Toshiba said that due to the tax impact, it expected a loss of 110 billion yen ($970 million) in the year to March, instead of its previously forecast profit of 230 billion yen. However, it kept its annual revenue and other profit forecasts unchanged.

Toshiba, desperate for funds to cover liabilities arising from its US nuclear unit Westinghouse, agreed last month to sell the unit – the world’s second-biggest producer of NAND flash memory chips – to a group led by Bain Capital.

A highly contentious auction meant that a decision on the buyer took much longer than expected, and Toshiba has run the risk of not getting anti-trust clearance before the end of the financial year in March as regulatory reviews usually take at least six months.

If it doesn’t get the deal done in time, it could end the year in negative net worth for the second year in a row, putting pressure on the Tokyo Stock Exchange to delist it.

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