In an AMD-like move to generate more short-term liquidity so as to strengthen its somewhat precarious position, Toshiba may be moving towards one of the most interesting shakeups in the NAND production field: a possible spin-off of its NAND production business into a separate company.
This move to restructure comes in the wake of recent snags and strategic mistakes for the company – such as the $1.2 billion dollar accounting “misstated” earnings, which created difficulties for the company to refinance itself in the Tokyo Stock Exchange. Also not negligible was a gross miscalculation on the amount of debt of the CB&I Stone and Webster company that Toshiba acquired so as to facilitate its U.S.-based Westinghouse Electric nuclear plant subsidiary investment. This “miscalculation”, where Toshiba considered the “goodwill” booking charges at $87 million, where recently restated as a roughly-defined “several billion U.S. dollars.”
Western Digital enters the picture because of WD’s financial health, and the fact that both companies already cooperate in the joint Flash Forward NAND production business – with Toshiba being a major partner of SanDisk, before WD acquired the company for $19 billion in 2015. However, Toshiba’s semiconductor operations, which includes the joint venture, accounts for nearly 80% of Toshiba’s operating profit, so completely alienating the production business would have dire long-term consequences.
This is where the spin-off part of the equation comes into play, allowing Toshiba to sell a partial stake in the new company – estimated at 20% – to generate a predicted ~$2.5 billion – a “quick” liquidity shot which should allow the company to plow through its currents difficulties. And with the Flash Forward initiative being critical to WD’s long-term prospects in the NAND market, WD is the most likely to invest in Toshiba’s spin-off.Source: Tom’s Hardware
