The 141-year-old Japanese multinational conglomerate may encounter millions of dollars loss in 2016. Consequently, Toshiba’s possible loss of billions of dollars triggering share price plummet. On Thursday, the share fell 17 percent to $259 which is a record low since 1974.
The vast conglomerate has already received the cut in credit rating from Moody’s Investors Service, Rating and Investment Information Inc. and S&P Global Ratings.
The Nuclear Reactor Disaster
The company’s countenance on nuclear reactor business is substantial. In fact, the dependency increased after the profit-padding scandal happened in last year. Eventually, the business line alone contributes a third of the company’s revenue.
This year in January Westinghouse Electric Company, acquired by Toshiba bought CB&I Stone & Webster Inc. According to Japan Broadcasting Corporation, NHK contention over the value of the nuclear construction business, CB&I & Webster may cause a loss of $4.3 billion. But as Bloomberg reported “Toshiba said in a statement… the write-down would exceed and initially anticipated amount of $87 million, and would probably be in the billions. It didn’t elaborate further. Still, such a loss would eclipse the 168 billion yen in net income that analysts were projecting, on average, for Toshiba’s current fiscal year Through March”. Moreover, a spokesperson for Toshiba said the financing will be good. He ensured the company has the adequate fund which will prevent any immediate impact on the financing.
The impending loss is panicking the shareholders and they are rushing to sell off the shares. Before this occurring cataclysm, Toshiba happens to be one of the best of three performing companies in Nikkei 225 Stock Average in 2016.