Toshiba in Multibillion-Dollar Loss on US Nuclear Acquisition

Toshiba Corp said it may have to book several billion dollars in losses related to a US nuclear power acquisition, a shock warning that sent its stock tumbling 12% and rekindled concerns about its accounting acumen.

The Japanese group said cost overruns at US power projects handled by a nuclear construction business newly acquired from Chicago Bridge & Iron (CB&I) would be much greater than initially expected, potentially requiring a huge writedown, Reuters reported.

Big losses would be another slap in the face for a sprawling conglomerate hoping to recover from a $1.3 billion accounting scandal as well as a writedown of more than $2 billion for its nuclear business in the last financial year.

Tom O'Sullivan, a former investment banker and founder of energy consultancy Mathyos Japan, noted the acquisition coincided with the finalizing of a record fine by Japanese regulators for accounting irregularities at Toshiba.

"This indicates that corporate governance controls at one of Japan's largest and most consequential companies may have been extremely weak," he said, adding the developments may further undermine confidence in Toshiba and significantly weaken its international nuclear credentials.

Shares in Toshiba, which remains on the Tokyo bourse's watchlist due to concerns about the firms' internal controls, finished 12% lower after the company flagged the announcement on Tuesday.

Toshiba, led by new CEO Satoshi Tsunakawa, has positioned its nuclear and semiconductors businesses as key pillars of growth while seeking to scale down less profitable consumer electronics units such as personal computers and TVs.

Masahiko Ishino, an analyst at Tokai Tokyo Research Center, said the focus may soon shift to whether Toshiba will divest some of its businesses.

"There will be a lot of companies that want to buy Toshiba's businesses," Ishino said. "It is possible that its NAND flash memory business would attract various buyout offers as there are few players in the market."