Toshiba Corp from Japan said Monday it would cut close to 7,000 of its jobs in consumer electronics after an accounting scandal of $1.3 billion. The overhaul of the company will streamline the huge conglomerate into a business focused on chips as well as nuclear energy.
Toshiba announced as well that it would sell its Indonesia plant for television manufacturing and the eventual jobs cuts would span its entire company including nuclear and PC sectors and could increase to 10,000 including the previously announced job cuts and those that are seeking early voluntary retirement.
Due to the cost restructuring that includes the Indonesian plant sale, Toshiba said it is expecting to have a net loss of close to 550 billion yen equal to $4.53 billion for the fiscal year that ends March 2016.
Through the implementation of the plan, the company said it would regain the stakeholders trust including the shareholders as well as transform the company into a strong business.
Toshiba last August confirmed that it had overstated its profits dating back to its 2008 and 2009 fiscal year by over 155 billion yen. It also reported a net loss of 37.8 billion yen for its last financial year as a reflection of the costs and the conservative estimates on the operations including the U.S. power plant the South Texas Project.
An accounting probe by an independent entity said this past July that Toshiba suffered from a dysfunction in its governance and from a culture of discouraging its employees from questioning authority.
Toshiba’s stock had dropped by 40% since the accounting problems became public in the early part of April. This scandal and the subsequent restatements of earnings highlighted a weakness in the range of its businesses.
Analysts said that restructuring was overdue. Toshiba launched the first mass market laptop in the world back in 1985. However, it has seen its division of consumer electronics dwindle amidst a price competition with rivals in Asia.
The change in its fortune highlights the business decline of a conglomerate that is 140 years old, which is highly influential in the business community in Japan.