(Bloomberg) -- Toshiba Corp. cut its full-year profit forecast and said its chief operating officer resigned after an investigation into his expenses, a pair of setbacks as the troubled electronics giant tries to extract favorable terms in privatization talks. Shares fell.
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The Japanese conglomerate said it now expects an operating profit of ¥95 billion ($721 million) in the year through March, down from a previous forecast of ¥125 billion. Operating profit fell more than 85% to ¥5.3 billion in the December quarter, while analysts had on average expected ¥36.6 billion.
Toshiba said COO Goro Yanase stepped down from his position to take responsibility for inappropriate entertainment expense claims while he was a manager at Toshiba Energy Systems in 2019. Yanase decided to remain as a director of the company this fiscal year, but Toshiba’s board will not to nominate him again.
“Yanase’s case made it clear that Toshiba’s troubled compliance attitude hasn’t changed at all,” said Hideki Yasuda, an analyst at Toyo Securities.
Shares slid as much as 2% in Tokyo trading.
Toshiba has lurched from scandal to fiasco since at least 2015, when it had to pay the country’s largest penalty ever for falsifying financial statements. It then suffered an ill-fated foray into the nuclear business that forced it to take a $6.3 billion writedown and sell off its crown jewel memory-chip business, Kioxia Holdings Corp.
In 2021, under pressure from activists, it announced plans to split into three units, only to revise that plan in favor of a two-way split last year. The chief executive at the time resigned to take responsibility for the chaos, after which the company’s board began soliciting bids to take the company private.
That auction process has dragged on as bidders try to arrange financing and win government approval. Akihiro Watanabe, chairperson of the board, said in a statement with the financial results that there is an urgent need to transform the company.
“We believe it is important to reach a final conclusion on the strategic alternatives of the company as soon as possible and to start working towards a new stage,” he wrote.
Toshiba is the smallest of the world’s three remaining hard-disk drive suppliers in an industry that is getting squeezed by sluggish electronics demand. Cloud service providers are trimming data center spending, following years of expansion in magnetic storage. That has been especially tough for Toshiba, which lacks the scale of Seagate Technology Holdings and Western Digital Corp.