Toshiba Announced to Split the Cash Cow Memory Business; What's the Next?

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Equity Bottom-Up

Toshiba has decided to implement a company split of its memory business by March 31, 2017. The purpose of the split is to: 1) enable flexible management of NAND flash business, which requires rapid decision-making and heavy investment; and 2) enhance Toshiba’s capital, which is expected to be severely damaged by the possible impairment of goodwill on nuclear power business. The company is considering a capital injection from a third party, which is less than 20% of the memory business.We forecast this year’s operating profit from NAND flash memory to be JPY 160 billion, while Toshiba’s total operating profit is JPY 250 million (excluding possible impairments of goodwill), which implies Toshiba needs to keep control of the business. We retain our fair value estimate of JPY 330 and keep our uncertainty rating as extreme, since we are not yet able to make a reasonable assumption of the potential underlying share base of the company.Analyst: Kazunori Ito

Toshiba has decided to implement a company split of its memory business by March 31, 2017. The purpose of the split is to: 1) enable flexible management of NAND flash business, which requires rapid decision-making and heavy investment; and 2) enhance Toshiba’s capital, which is expected to be severely damaged by the possible impairment of goodwill on nuclear power business. The company is considering a capital injection from a third party, which is less than 20% of the memory business.We forecast this year’s operating profit from NAND flash memory to be JPY 160 billion, while Toshiba’s total operating profit is JPY 250 million (excluding possible impairments of goodwill), which implies Toshiba needs to keep control of the business. We retain our fair value estimate of JPY 330 and keep our uncertainty rating as extreme, since we are not yet able to make a reasonable assumption of the potential underlying share base of the company.Analyst: Kazunori Ito

東芝、NANDフラッシュメモリ事業の分割を決定、原子力事業の詳細は2月に開示

Toshiba Corp

東芝、NANDフラッシュメモリ事業の分割を決定、原子力事業の詳細は2月に開示