Tech giant Toshiba has confirmed plans to shed 3,900 jobs by next March following the largest ever loss in the company's history.
As reported over on The New York Times
, the Japanese semiconductor specialist has announced that its losses for the last financial year are an eye-watering ¥350 billion, or £2.38 billion. This is a massive rise from the predicted ¥280 billion loss the company had previously announced, and marks the largest net loss in the history of the company.
Despite this, Toshiba's shares have enjoyed a brief surge – closing trading on Friday of last week 4.4 percent higher following news that the overall operating loss for the financial year would be down to ¥250 billion, along with the knock-on effect of a recent increase in the selling price of the flash memory produced by the company.
In order to stem its growing losses and return to profitability, the company will be shedding a total of 3,900 contract workers from its Japanese facilities by next March – on top of the 4,500 temporary workers it has already dismissed. These job losses form part of the company's restructuring programme which it hopes will cut ¥300 billion from its fixed costs over the next twelve months.
Even if the company manages to reduce its overall costs, financial analysts are still worried about the large debt burden it carries: with the credit crunch still biting, analysts fear that Toshiba could find its lines of credit drying up.
As a means to restore shareholder confidence in the company, Toshiba is also replacing its chief executive officer Atsutoshi Nishida – who has served the company as CEO for the last four years – with the current head of the company's social infrastructure division, Norio Sasaki.
It is not currently known what effect Toshiba's current financial condition will have on its plans to purchase Fujitsu's hard drive manufacturing business, which is still pending and – if it goes ahead – would make Toshiba the largest 2.5” mechanical hard drive manufacturer in the world.
Should Toshiba be worrying about the massive losses it has posted, or is the company large enough – as the investors seem to believe – to ride out the current financial doldrums and return to profitability under Sasaki's leadership? Share your thoughts over in the forums