Toshiba Shares Fall on Report of Additional Funding
Toshiba Corp., Japan's biggest chipmaker, fell to the lowest in more than 28 years in Tokyo trading after a report suggested the company may raise funds through a stock offering, diluting the value of existing shares, Bloomberg reported.
Toshiba fell 7.8 percent to 212 yen as of 10:33 a.m. on the Tokyo Stock Exchange, the lowest since September 1980. The benchmark Nikkei 225 Stock Average slid 0.8 percent.
The company is considering raising more than 300 billion yen ($3.2 billion) by Sept. 30 to strengthen its finances, the Yomiuri newspaper reported after the market closed on Feb. 20, without saying where it got the information. A stock sale would dilute the value of the chipmaker's existing shares, the report said.
"We see little need for capital reinforcement," Hitoshi Shin, a Tokyo-based analyst at UBS AG said in a report dated Feb. 20. "The dilution risk may ease," if the company invests the money in its chip business or to improve profit margins.
Toshiba's capital may be eroded as the company faces a record loss this fiscal year after prices of chips used in mobile phones, digital cameras and portable music players plunged amid the global recession. The company is considering various measures to strengthen its finances, Chief Financial Officer Fumio Muraoka said in January, without elaborating.
The situation hasn't changed since that statement, Ken Shinjo, a spokesman at Tokyo-based Toshiba, said on Feb. 20 after the Yomiuri report.
Toshiba's net loss will probably reach 280 billion yen in the year to March 31, compared with profit of 127.4 billion yen a year earlier, the company said last month. Sales will probably slump 13 percent to 6.7 trillion yen.