ZDNet is reporting that Toshiba is in a bit of a financial bind following losses from acquisitions and its Westinghouse division — which saw massive losses and cost overruns in the US Nuclear market — which could amount to billions of dollars. In an effort to offset some of those losses and preserve shareholder equity, Toshiba plans to spin off its memory business into a new company and then offer up to a 20% stake in that new company for sale. The new company would include its memory chip and SSD business though its image sensor division would stay with Toshiba and not be part of the spin off.
Toshiba is the second largest memory manufacturer behind Samsung and it is one of the company's most profitable divisions making up the majority of its operating profit.
The company is hoping that other companies or investors will be interested in a piece of that business and that the company will be able to raise enough money from the sale of up to 20% of the spin off company to make up for the losses incurred in its US nuclear market ventures.
Toshiba plans to hold a shareholder meeting in March to seek approval for the plan stating that if it us unable to proceed with the plan and complete a sale to bring in cash by the end of its fiscal year (the end of March), “shareholder equity could be wiped out.”
It is interesting that Toshiba is once again having a bit of corporate drama and needing to restructure (it sold off its PC division in 2015). This could be a good opportunity for one of the smaller memory makers or even one of the spinning rust manufacturers to become more relevant in the flash storage space (and if having a stake got them access to IP for their own stuff even better though that would probably cost them a ton more!). Alternatively, the stake could be bought up by an a large company that just wants a profit machine to grow even larger (heh).
Hopefully the guys will discuss this bit of news on the podcast! What are your thoughts?