Japan’s Canon lifted its full year operating profit forecast after reporting strong first-quarter results on the back of earnings from a medical equipment unit it bought from Toshiba last year.
The camera and printer maker forecast profit of $2.43 billion, up from $2.28 billion estimated in January. It reported profit of $2.05 billion in the previous year
The upbeat outlook suggests Canon’s strategy to diversify has begun to reward the company after the $5.8 billion acquisition of the Toshiba unit and the $2.8 billion takeover of Swedish video-surveillance firm Axis AB.
Canon also said the two existing businesses that have long dragged its earnings down – laser printers and cameras – are also showing signs of bottoming out.
Executive Vice President and Chief Financial Officer Toshizo Tanaka told an earnings briefing that recovery in the Chinese and other emerging economies is pushing up demand for laser printers, while continued popularity of so-called mirrorless cameras is driving camera sales.
For the January-March quarter, Canon said operating profit jumped 88.8 percent
US private equity outfit KKR & Co and Japanese government-backed fund, Innovation Network of Japan (INCJ) have announced that they will send a joint offer for Toshiba’s memory chip unit.
They are the latest to throw their hat into the ring to buy the memory chip unit, which Tosh is flogging off to cover charges at its US nuclear business, Westinghouse.
KKR is expected to take part next month in a second bidding round after performing due diligence on Toshiba’s memory chip business, the Nikkei report said.
INCJ could invest in the Toshiba business if it made sense, Japan’s industry and trade minister had said on Wednesday. The Japanese are concerned about Japanese companies being flogged off overseas.
Toshiba has so far narrowed the field of bidders to four: Western Digital, Broadcom, South Korea’s SK Hynix and Foxconn.
The state-backed fund Innovation Network of Japan is looking at the auction of Toshiba’s chip unit.
NCJ Chairman Toshiyuki Shiga said the outfit said that it did not participate in first-round bidding, but according to Reuters it might seek to invest in the business as a minority partner.
This is all part of a plan to help the government blocking a sale to bidders it deems risky to national security.
INCJ has confirmed it has set up a team to look at publicly available information regarding the deal but is not conducting due diligence and that it would be unable to bid by itself.
The auction of Toshiba’s prized chips asset is essential to the company’s plans to cover multi-billion dollar write-downs at its US nuclear unit Westinghouse.
Toshiba has narrowed the field of bidders for its chip unit to four suitors, Broadcom partnered with private equity firm Silver Lake; SK Hynix; Western Digital and Foxconn.
Broadcom has put in the highest first-round offer of $23 billion and Taiwan’s Foxconn, the world’s largest electronics contract manufacturer, offered $18.37 billion.
Turkey’s Vestel is in talks to buy the television unit of Japan’s troubled Toshiba.
An unnamed official for the Turkish maker of electronics and home appliances has confirmed that his company has put in a bid for cash strapped Tosh’s telly business.
Tosh needs the cash. Toshiba, a televisions-to-construction conglomerate expects to book a net loss of about $9 billion for the year that ended in March, due to a writedown related to cost overruns at its US nuclear unit Westinghouse that recently went bankrupt.
It has already said that it will flog off its profit making chip business, but no one really expected its tellies to go Turkish, or that it could find a buyer for its TV business.
Vestel last year signed a five-year agreement with Toshiba, giving it the right to produce and sell televisions under the Toshiba brand in Europe. It is not clear if the Toshiba brand in Europe will get the works, if the deal goes ahead that will be no-body’s business but the Turks.
Private equity outfit Silver Lake and US chipmaker Broadcom have offered Toshiba Corp about $17.9 billion for its chip unit.
According to the Nikkei Business Daily, 10 bidders have thrown their hats in the ring to buy a stake the NAND flash memory maker.
These include Western Digital which runs a chip plant with Toshiba in Japan, Micron, and South Korean chipmaker SK Hynix and financial investors.
Toshiba wants to make at least $8.93 billion from the sale of part or all the business to cover write-downs at its Westinghouse nuclear unit. It says it expects investors to value its chip operations at about $17.9 billion. This means that the Silver Lake Broadcom offer is close to the asking price.
Toshiba is also asking potential bidders whether they intend to resell their stakes and wants to decide on the sale before a shareholders meeting in June, the Nikkei said, without saying where it obtained the information.
Toshiba shareholders on Thursday agreed to split off its prized chip unit, paving the way for the sale.
South Korean chipmaker SK Hynix is in talks with Japanese financial investors about forming a consortium and jointly bidding for Toshiba’s memory chip business.
According to the Korea Economic Daily which found it difficult to get anyone to talk on the record, SK Hynix, the world’s No. 2 memory chip maker behind Samsung plans to give a preliminary bid for the Toshiba chip business today.
The Japanese firm put up the business for sale because it needs the cash to deal with its $6.3 billion writedown caused by the fact that invested in a bankrupt nuclear unit Westinghouse. Tosh has applied to bankrupt Westinghouse and write off its assets.
Tosh’s memory business has been doing well and would make a good partner for SK Hynix if it can gather together enough readies to buy it.
Taiwan’s Foxconn, the world’s largest contract electronics maker, is not a favoured bidder for Toshiba memory chip business because it is too close to China.
Apparently the Japanese government has told Tosh that flogging its flash business to China would be opposed because it means the transference of key technology.
Foxconn has plants in China, and the Japanese fear that putting the tech close to the Chinese would result in the tech leaking out due to industrial espionage and internal corruption.
Toshiba, the second-biggest NAND chip producer after Samsung, wants to sell the majority – or all – of its marquee flash-memory chip business, as it seeks to make up for a $6.3 billion writedown from its US nuclear unit Westinghouse.
Toshiba is valuing its chip business at $13.1 billion, people familiar with the matter have said. Initial bids are due by the end of the month.
Foxconn said last week it was “definitely bidding” for Toshiba’s chip business and that it was “very confident” it could buy into it.
Yesterday the Nikkei business daily reported that Foxconn has approached SK Hynix to explore a joint bid.
TSMC, another Taiwanese firm and the world’s largest contract chipmaker, is also deeply interested in Toshiba’s chip unit.
Troubled Toshiba will raise $8.8 billion by selling most of its flash memory chip business, seeking to create a buffer for any fresh financial problems.
Tosh has been talking about flogging off part of its successful Flash memory business for a while because that would sort its problems out a bit quicker.
But it decided to abandon that cunning plan to sell just 19.9 percent at the instigation of its main creditor banks which are worried about potential writedowns that may come on top of $6.3 billion hit to its US nuclear unit.
Prioritising its need to raise capital, Toshiba said last week it is now prepared to sell a majority stake or even all its prized chip business.
Toshiba has not decided on the size of the stake to be sold, preferring to focus on the amount that can be raised although it would like to retain a one-third holding that would give it a degree of control over the business, sources in the outfit have leaked.
The sale is the best and the only way Toshiba can raise a large amount of funds and wipe out concerns about its credit risk. The sale should be completed by the end of March next year.
It wants to restart the sale process as soon as possible and may sell to multiple buyers rather than one bidder with interest already received from investment funds, other chipmakers and client companies, he also said.
Other potential financial risks that Toshiba may have to deal with include Landis+Gyr AG, an unlisted German meter maker it acquired in 2011 and whose earnings have not matched expectations.
When Toshiba was offering 19.9 percent of its chip unit, it received offers ranging from $1.8 billion to $3.5 billion.
Western Digital is still interested in buying a stake in Toshiba, two sources said without specifying how big a holding it would be prepared to buy. The California-based firm and Toshiba jointly operate a NAND flash memory plant in Japan.
As expected, the electronics outfit Toshiba has seen a $3.52 billion loss in the nine months through December.
The loss is largely due to a goodwill impairment of around $5.28 billion on a US nuclear unit that came to light in late 2016.
The company hopes to keep the amount it owes from exceeding the value of its assets for the full year through March by selling part of its chip operations and taking other measures.
Toshiba will announce earnings for the April-December period tomorrow, along with a full-year outlook. The company is also expected to explain the cause of the losses, measures to avoid similar events and plans to rebuild its nuclear business.
Troubled Tosh, which was suffering from an accounting scandal, had to write-down of goodwill of CB&I Stone & Webster, a U.S.-based nuclear plant builder Toshiba acquired through U.S. subsidiary Westinghouse Electric in late 2015. Apparently, the world did not want nuclear power anymore and labour and materials costs were much higher than expected.
Toshiba overestimated the value of the company’s projects at the time of acquisition.
Now the company is rushing to flog off its semiconductor business to boost some capital.
But the problems are not just with the nuclear purchase. Toshiba is seen considering another goodwill write-down for Landis+Gyr, the world’s leading electric meter maker, which it acquired in 2011.
Toshiba had expected Landis, a Swiss company, to become a growth engine for its smart grid and smart community thrust, but its hopes have not materialized. It is expected to have to write down some of the value of this outfit too,
Troubled Toshiba has received bids ranging $1.8-3.6 billion for a 19.9 percent stake in its flash memory business.
Tosh needs to raise around $3 billion from the sale to make it worthwhile. The outfit needs to offset a multi-billion-dollar write down on its US nuclear power business.
Buyers for the Japanese company’s chip unit include SK Hynix and Micron and data storage firm Western Digital and financial investors such as Bain Capital.
Tosh would prefer bids from investment funds because it could conclude a deal quicker than with industry peers that may have to seek permission from competition regulators before any acquisition.
A Toshiba executive has said the company will consider not just the offer price when selecting a bidder but other conditions as well.
A Toshiba spokeswoman said the company could not comment on specifics of the sale process.
The Nikkei Business Daily reported market concerns that Toshiba could delay its third-quarter earnings release, without citing sources. On reporting earnings, Toshiba also plans to reveal the write down on its US nuclear business.