Facing huge losses, Toshiba to cut nearly 7,000 jobs

A scandal at one of the nation's top brands highlights how Japan is still struggling to improve corporate governance, despite efforts to beef up independent oversight of companies.

Thomas Peter/REUTERS
Toshiba Corp President and CEO Masashi Muromachi attends a news conference at the company headquarters in Tokyo, Japan, December 21, 2015.

Scandal-plagued Japanese manufacturer Toshiba Corp. is cutting 6,800 jobs after projecting a net loss of 550 billion yen ($4.5 billion) for the fiscal year through March 2016.

Toshiba said Monday it will slash the jobs in its personal computer, video product and consumer electronic businesses. The job cuts equal about 3 percent of Toshiba's overall employees. It is also selling its TV plant in Indonesia.

Toshiba, which also makes nuclear power plants, has repeatedly apologized after acknowledging it had systematically doctored its books over several years to inflate profits by 152 billion yen ($1.3 billion).

Officials have said that mangers set unrealistic earnings targets, under the banner of creating a big "challenge," and subordinates faked results.

The scandal at one of the nation's top brands highlights how Japan is still struggling to improve corporate governance, despite efforts to beef up independent oversight of companies.

Toshiba said the job cuts in Japan will be by early retirement, but a significant number of overseas jobs will also be involved and steps will vary by each nation. It did not immediately have a detailed regional breakdown.

Earlier this year, Toshiba said it is selling facilities for making computer chips related to image sensors to Sony Corp.

Toshiba is also in trouble because it operates and is decommissioning, with Hitachi and other companies, the Fukushima Dai-ichi nuclear power plant, which went into meltdowns after the March 2011 tsunami.

Toshiba said it had not yet fully calculated the impact of the nuclear disaster on its books.

The latest earnings projection means Toshiba is sinking into its second straight year of red ink, after racking up a nearly 38 billion yen ($312 million) loss for the fiscal year that ended in March.

Japanese media reports said the loss forecast for this fiscal year would be a record for Toshiba, surpassing the massive losses during the Lehman financial crisis.

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