
Toshiba, desperate for cash after scandal, will sell chip business - anigbrowl
https://www.nytimes.com/2017/01/27/business/dealbook/toshiba-microchip-japan-spin-off.html
======
LeifCarrotson
> Toshiba is expected to detail the extent of its write-downs next month.
> Analysts have suggested they could amount to $4 billion to $7 billion,
> enough to put Toshiba’s future at risk. Banks have indicated they will keep
> lending money so the company can pay its bills, but without that lifeline,
> Toshiba, a 140-year-old business, could collapse.

Startups collapse all the time. That makes sense, they've often been operating
for just a few months or years. Some are dependent on regular cash infusions
from investors, hoping to grow large quickly, while bootstrapped businesses
turn every meager dollar of revenue back into growing the business, hoping to
beat the odds and develop into a stable business. Both models are much like a
person on the edge of poverty, living paycheck to paycheck just trying to keep
up with rent and bills, perhaps taking out credit cards to make something
work, dreaming of a very far-off future where they're living in a house they
own outright on a large retirement fund.

But why is it that a company like Toshiba, in operation for more than a
century, is dependent on the goodwill of banks to remain solvent?

~~~
n00b101
> why is it that a company like Toshiba, in operation for more than a century,
> is dependent on the goodwill of banks to remain solvent?

This is historically very common in Japan, where they are known as Zombie
companies. [1] It's been suggested that this is due to a fierce cultural taboo
against failure. So, for example, corporate bankruptcy rates in Japan are
extraordinary low - not because Japanese companies are so much better, but
because Japanese banks keep poorly performing corporations alive using debt.
The bad debts then lead to the phenomenon of Zombie banks [2] that are kept
alive by the government. The Japanese government also directly bails out
technology companies through the Innovation Network Corporation of Japan
(INCJ) [3], which bailed out Sharp last January with a $1.7 billion loan.

This "Zombie" behaviour is thought to be partly responsible for the decades of
Japanese economic under-performance known as the "Lost Decades" [5]. It is
also feared that "Zombies" are becoming widespread in China. It might also be
showing up European and even US economies due to bail-outs actions taken by
those governments after the financial crisis. It seems to me that Trump's
brand of economic policy might also create these types of Zombie problems.

[1]
[https://en.wikipedia.org/wiki/Zombie_company#History](https://en.wikipedia.org/wiki/Zombie_company#History)

[2]
[https://en.wikipedia.org/wiki/Zombie_bank](https://en.wikipedia.org/wiki/Zombie_bank)

[3] [https://en.wikipedia.org/wiki/INCJ](https://en.wikipedia.org/wiki/INCJ)

[4] [http://www.reuters.com/article/sharp-restructuring-incj-
idUS...](http://www.reuters.com/article/sharp-restructuring-incj-
idUSL3N14V16S20160111)

[5]
[https://en.wikipedia.org/wiki/Lost_Decade_(Japan)](https://en.wikipedia.org/wiki/Lost_Decade_\(Japan\))

~~~
leereeves
> It seems to me that Trump's brand of economic policy might also create these
> types of Zombie problems.

How so?

~~~
antisthenes
Subsidizing unprofitable segments of the US economy through government grants
and programs to keep jobs alive?

It's sort of a big part of the platform he ran on.

~~~
leereeves
When did he promise government grants?

He made some promises to workers in unprofitable industries, like reducing
regulation on coal, but I can't think of or find any promises of new grants or
subsidies.

And he's eliminating some huge government grant/subsidy programs, like the
ACA.

~~~
Vraxx
Carrier is a fine example of promised government grants for not moving jobs.
The grants were just in the form of tax breaks [0] (spending the tax revenue
before it ever gets to congress).

[0]: [https://fivethirtyeight.com/features/why-trumps-carrier-
deal...](https://fivethirtyeight.com/features/why-trumps-carrier-deal-isnt-
the-way-to-save-u-s-jobs/)

~~~
leereeves
According to your source, the tax breaks were offered by Indiana, not by
Trump.

------
heisenbit
There are few things as dangerous as taking over a US company with some
liabilities as quite a few other companies can attest to (e.g. Deutsche Bank).

The strategic question Toshiba faces is not just holding on to the chip
business but also ensuring that it can compete. The semiconductor business is
getting more and more capital intensive. It also seems to require more and
more vertical integration causing Intel etc. to but tool suppliers who are not
able to maintain the required investments.

------
mankash666
Why sell the profitable chips business and keep the ailing and scandal ridden
nuclear business?

~~~
detaro
"ailing and scandal ridden" doesn't sound like something they could sell very
well, why would anyone buy it (for a high enough price)?

~~~
jobu
Couldn't they spin off Westinghouse into its own company and let it fail on
its own instead of bringing down Toshiba?

~~~
jessaustin
Creditors are smart enough to forward the bills to the parent company.

------
woliveirajr
Context:
[https://www.ft.com/content/7cfd3c68-d23a-11e6-b06b-680c49b4b...](https://www.ft.com/content/7cfd3c68-d23a-11e6-b06b-680c49b4b4c0)

~~~
cptskippy
A Paywall with no possibility to bypass doesn't offer any context.

~~~
PhantomGremlin
FWIW I was able to read that article. I'm an FT "subscriber" but I don't pay
anything. I simply registered for the site.

When I registered years ago the deal was something like 5 free articles a
month. I don't know if FT still has a promo like that or if they changed their
terms.

Maybe all that's still required is to register? If so, I recommend you do it.
The FT is a great publication.

Also, Matt Drudge occasionally links to them. He bypasses the paywall by using
a search via Google UK. So that trick could also work?

Yes I know it's a PITA, but writers and editors do need to eat and to pay
their rent.

~~~
grzm
If you have the title of the article in your parent, perhaps we can do the
same here.

Edit: Or, I can :P

[https://www.google.com/#q=Toshiba+rattled+by+report+of+fresh...](https://www.google.com/#q=Toshiba+rattled+by+report+of+fresh+scandal+evidence)

------
ComputerGuru
It sucks that only major company to make a play for nuclear clean energy is
now paying for it through the nose and possibly with its very existence.

~~~
jessaustin
Eventually everyone will learn, that nuclear power can't pay for itself.

~~~
sqeaky
This is a largely a historic and legislation problem. Nothing about nuclear
technology itself makes it impossible as a business.

I suspect this is political problem because there are powerful oil interests.
I also think people are so afraid of radiation that they demand countless
inspections, fees and other costly regulation.

If every energy field got this level of scrutiny then coal mines would be
safe, coal plants wouldn't emit more radiation than nuke plants and carbon
sequestration would be a thing or we would be using nuclear. The costs would
be double or triple what they are now though.

~~~
jessaustin
Nuclear power didn't even pay for itself back in the 1950s when e.g. the
Paducah gaseous diffusion plant with its _horrendous_ safety and environmental
record was in its heyday. Valves and pipes constantly ruptured, workers were
routinely exposed to precipitating clouds of uranium hexaflouride (the burns
are worse than the radiation), and _most workers were never issued radiation
badges_. Somehow the safety manuals from the Manhattan Project a decade before
were misplaced on the way to Paducah? Maybe the nuclear physicists in
Alamogordo were just better-informed than hillbillies in western Kentucky?

Incidentally the Paducah plant's mammoth power requirements were supplied by
TVA coal.

Paducah and other sites like it eventually prompted Congress to pass the
Energy Employees Occupational Illness Compensation Program Act. Externalities!

------
pmlnr
> Other potential buyers include Western Digital [...] Tokyo Electron [...]
> Foxconn

Please keep this in Japan, please. Foxconn and WD already has too much power.

~~~
Animats
Yes. Anybody in the US with enough money to buy this?

~~~
phonon
Micron?

