Both the Toshiba Shares and its Rating took a steep fall after the company released a statement announcing the possibility of billions in losses.
Toshiba Corporation is a conglomerate corporation. It was founded in 1938 and is based in Tokyo, Japan. The multinational has a wide area of expertise. It is organized into four major business groupings.
These are the Electronic Devices and the Digital Products Groups. There also are the Social Infrastructure and Home Appliances Groups. Their name list their main area of expertise.
Toshiba is also the majority owner of Westinghouse Electric Company LLC. The nuclear power company is based in Pennsylvania, the United States.
They were acquired by the Japanese conglomerate back in 2006. Last year, in 2015, Westinghouse made a quite controversial acquisition.
It came at a time when Toshiba was facing an accounting scandal. The Westinghouse goodwill and assets were accused of being overstated. However, the Japanese company maintained its position.
It declared, at the moment, that its nuclear business was even more profitable than almost a decade back.
However, recent declarations might come to contradict the previous statements. Earlier this week, Toshiba released another announcement on the matter.
It declared that it was expecting to write down its Westinghouse investment. “Several billions” would most probably be involved in the matter. They went to further point out another fact.
The Westinghouse investment could turn in a negative worth. Reactor construction cost overruns were offered as a cause.
Toshiba had already been harboring some financial difficulties. However, steady increases and stable results had managed to somewhat regain investor trust. Still, the latest news seems to have caused a new wave of concerns.
Released just earlier this week, the potential billions loss was quick to give way to a reaction. Since Monday, the Toshiba share value has continued decreasing.
It is down by over 30 percent when compared to its early Monday value. Reports of the loss started circulating later that day. On Tuesday alone, the share value fell by 12 percent.
Still, the Toshiba shares are not the only ones to decline. Moody’s Investors Service lowered the Toshiba senior unsecured rating. They were taken down a notch. As such, they are now rated at Caa1 from B3.
As it is, they will also carry a potential “negative equity position”. Rating and Investment Information or R&I also cut the company’s rating.
The Japanese credit rating firm lowered its standing by two notches. As such, it now stands at BBB- from BB. R&I also warned that a further downgrade might still follow.
Both downgrades were linked to the CB&I Stone & Webster potential several billion loss.
As both the Toshiba shares and ratings fell, some reports are pointing out another potential problem.
The Toshiba shares had just started growing after last year’s scandal. Still, this new, but potentially expected development may be a further dent in their credibility.
Market analysts argue that the Westinghouse problems could have been predicted. As such, they state that it should long since been on the radar.
They are also wondering how the company will be recovering its once again lost grounds. As Toshiba’s main area of expertise is still in electronics, some are even arguing the need of the nuclear constructions.
The Toshiba share value fell a further 20.4 percent as the Tokyo trading closed for the day. The company value also suffered, as it closed a 1.3 trillion yen or $11.05 billion.
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