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Toshiba lets go of consumer biz amid reorg plan

Posted: 23 Dec 2015 ?? ?Print Version ?Bookmark and Share

Keywords:Toshiba? reorganisation? PC? notebook? IDC?

Toshiba is doing away with its consumer systems division in a broad reorganisation that underscores the decline of the consumer notebook business. The company will lay off 6,800 people or about 30 per cent of the division designing and making PCs, TVs and appliances as part of the plan.

The move is part of a restructuring programme in the wake of an estimated loss of $4.53 billion for its fiscal year ending in March. The Japanese company that makes everything from NAND flash chips to washing machines expects roughly $51.28 billion in sales for its current fiscal year, down from $55 billion last year when it recorded a loss of nearly $312.64 million.

Toshiba will focus on its semiconductor and energy units going forward, and seek investors to maintain needed R&D levels in its medical imaging group. The reorganisation plan will cost Toshiba $2.15 billion this year, including costs for a reorg of its semiconductor unit announced earlier this month.

Analysts said Toshiba's plan to shift to business notebooks makes sense given the decline of the consumer laptop market. The company should be able to maintain its position as a top supplier of NAND flash despite current oversupply conditions depressing prices, particularly of solid state drives (SSDs).

The reorg comes on the heels of a corporate accounting scandal that came to light earlier this year and led to the resignation in July of its CEO. As part of its reorg, Toshiba laid out a dozen steps it will take to reform its culture and prevent a reoccurrence of financial mismanagement. It will also cut 1,000 corporate jobs by March.

Toshiba operating losses

Operating losses could double amid falling revenues this year, according to Toshiba's latest forecast (All image: Toshiba)

Toshiba will cut $660 million in annual costs from its consumer division. Its PC group will exit the global consumer laptop business to focus on the market in Japan for business notebooks as well as specialised services and software for them, downsizing sales to about three million laptops a year. The group also will be charged to "expand the development of an IoT business for the insurance, distribution and security sectors," according to Toshiba.

The group will lay off by March 1,300 people, about 30 per cent of its staff, and expects to be profitable in the following fiscal year. It will make all its own systems, ending relationships with third-party notebook assemblers, cutting the number of its product platforms by more than two-thirds and reducing 13 offices down to four.

Toshiba to lay off 10,600 people

The latest layoffs bring Toshiba's cuts to a total of 10,600 people.

The TV unit will take similar steps, focusing only on the Japan market where it expects to sell about 600,000 sets this year, laying off 3,700 people, about 80 of staff. It will sell off a factory in Indonesia as part of the deal which includes a similar retrenchment in its home appliances group.

Toshiba is ranked the seventh largest notebook supplier globally by International Data Corp. (IDC), but focused on an ailing consumer laptop market. Smartphone, tablets and business notebooks brought home have sucked the growth out of the laptop market which once was expanding at double digit rates.

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