Toshiba Corp., the embattled electronics and machinery giant once deemed a blue-chip company representative of Japan Inc., is seeking to survive the latest crisis deriving from huge losses in its nuclear power business in the United States by selling off its cash cow semiconductor unit to raise funds to pay off debts and restore financial health. While it remains uncertain whether the sale of memory chip business will proceed as hoped, Toshiba needs to realize that its survival will still depend on fixing its management and governance problems that brought it down to its current low state.

On Tuesday, Toshiba released its earnings report for the April-December period of 2016 without approval from its auditing firm — an extremely rare move for a listed company — after twice postponing the report due to differences with the auditors over the losses at the troubled U.S. unit Westinghouse Electric Co. The unaudited report said that Toshiba incurred a net loss of ¥532.5 billion over the period and that it had a negative net worth of ¥225.6 billion at the end of December — meaning that its debts were in excess of assets by that sum. Toshiba earlier said it expects its losses in the full year to March to reach ¥1.01 trillion and that the debt excess would reach ¥620 billion.

The sale of its core semiconductor business is intended to raise the money needed to erase this debt excess and bolster its financial standing. While the question remains of how the company will rebuild its group business after parting with the profitable memory chip unit, Toshiba reportedly hopes that the sale would rake in funds to the tune of ¥2 trillion — although the government’s concern about an outflow of the latest semiconductor technology through possible sale of the unit to overseas firms cast doubt over the prospect of a deal.

That and the question of whether the firm can remain listed aside, Toshiba needs to get to the bottom of how its current ordeal happened, and take steps to fix the problems that let it happen. Unless the company identifies and addresses the root causes of its management woes behind the ongoing crisis, its future may not be guaranteed even if it survives the crisis at hand.

Toshiba was believed to have been on its path toward recovery from the profit-padding accounting scandal that surfaced in 2015 and led to the resignation of three former and incumbent presidents, when the company revealed late last year that it had confirmed huge cost overruns on nuclear power plants that Westinghouse was building in the U.S. That forced Toshiba to incur massive losses and drove it into debt excess, which, if repeated for two consecutive accounting years, would automatically delist the company from the Tokyo Stock Exchange.

In March, Toshiba had Westinghouse file for Chapter 11 protection from creditors to shut out further risk from the nuclear power business in the U.S. and removed the unit from the group’s consolidated books. Meanwhile, Toshiba was unable to reconcile its differences with its auditor over claims that Westinghouse executives had pressured subordinates to understate its losses — which could raise questions about its earlier earnings reports — until it decided this week to report the April-December earnings unapproved by the auditor.

To learn from the fiasco, Toshiba will need to look back on its decision in 2006 to buy Westinghouse at a cost of more than ¥600 billion — whether right decisions were made by properly assessing and weighing the risks and future prospects of nuclear power business overseas, or whether it had been swayed by excessive hopes on the nuclear energy business. At that time, Toshiba was seeking to expand its nuclear business amid what was seen as a nuclear power industry revival in many countries — a drive that was also fanned in Japan by the Ministry of Economy, Trade and Industry.

However, the cost of safety regulations in nuclear power plants continued to increase — which accelerated in the wake of the triple meltdowns at Tokyo Electric Power Co.’s Fukushima No. 1 plant in March 2011. Construction of the four nuclear reactors under way by Westinghouse were delayed and faced cost overruns by the tightened U.S. regulations before and after the Fukushima disaster. The failure of Toshiba’s investment in Westinghouse signals the company’s poor control over its overseas nuclear power business. There must have been chances over the years for Toshiba to review the profitability and future prospect of the nuclear business — and reassess the business where necessary. The current crisis can be attributed to its management’s failure to take such steps. Toshiba must come to grips as to why.

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