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Confusion erupts as Toshiba delays earnings report

Investors focused their gaze on Toshiba Corp. on Feb. 14 as they waited for the electronics giant to announce huge losses for the April-December period in connection with its U.S. nuclear business at noon the same day. But shortly after noon, a message appeared on the company's website stating, "This is notice that we have been unable to make a disclosure at 12 o'clock today."

When there was no further announcement for some time afterward, Toshiba's shares began to slide rapidly. A news conference with Toshiba President Satoshi Tsunakawa was scheduled for 4 p.m. and reporters crowded into Toshiba's headquarters. But just before 3 p.m., when the venue was supposed to open, Toshiba announced that it would delay its earnings report. A public relations official in the lobby of the company headquarters announced in a loud voice, "We still don't know when the news conference will be held," creating a stir among the reporters assembled there.

The market was taken aback by the delay, with observers expressing surprise that the company was unable to announce its earnings at such a stage.

In giving a reason for the delay, Toshiba said that there had possibly been "inappropriate pressure" from the management of its U.S. nuclear unit Westinghouse Electric Co., which it bought in 2015, when evaluating the value of its assets.

On Jan. 8 and 19, a Westinghouse executive blew the whistle on the company in letters to the Westinghouse president, and an investigation by lawyers and an auditing company took time so the company was unable to settle its accounts. If the information from the whistleblower is accurate it could affect accounting details, so Toshiba decided that there was no option but to delay the announcement on its earnings.

Tsunakawa finally opened the news conference at about 6:30 p.m., but when it came to the details of the whistleblower's report, a Toshiba executive who was present repeatedly stated that the matter was under investigation and so the company would refrain from commenting.

At the same time, Toshiba stated that it took the unusual step of announcing its earnings in the form of an outlook including massive losses as the amount was unlikely to change significantly based on the results of an investigation into the whistleblower's report, according to a Toshiba official.

A major accounting scandal was uncovered at Toshiba in 2015. On that occasion, the company had not managed to announce its earnings on time, and there were two delays. Then president Hisao Tanaka resigned to take responsibility, and the company had been working on management reconstruction and restoring trust.

With the announcement of the massive losses on its U.S. nuclear business, however, Toshiba has once again waded into management woes and on Feb. 14, the company gave news that Chairman Shigenori Shiga, who was in charge of the nuclear unit would step down to take responsibility. Yet while Shiga bore a large responsibility he did not appear at the news conference by Tsunakawa.

It is extremely rare for a company listed on the first section of the Tokyo Stock Exchange to repeatedly suddenly delay announcements on its earnings, and it appears that for Toshiba, the path to restoring trust will be a long one.

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