In a sign of how the fortunes of Japanese electronics companies have shifted, Seiko Epson will be replacing Toshiba Corporation on the Nikkei stock average as of August 1.
Nikkei Asian Review reported on July 10 that Nikkei Inc. has announced that Epson will replace Toshiba on the Nikkei stock average, also known as the Nikkei 225 or the Nikkei Index, a stock market index for the Tokyo Stock Exchange that is similar to the Dow Jones Industrial Average in the United States. August 1 is also the date on which Toshiba’s shares will be reassigned from the first to the second section of the Tokyo Stock Exchange (see “Toshiba Fights with Western Digital and Will Be Demoted on Tokyo Exchange”).
Actionable Intelligence has followed Toshiba’s myriad troubles this year (see the tag Toshiba). While Toshiba’s woes go back to its accounting scandal in 2015, things reached a tipping point for the company in calendar-year 2017. Due to huge losses in its nuclear business, which has declared bankruptcy, Toshiba is expecting to report a net loss of ¥995.2 billion ($8.7 billion) on net sales of ¥4.87 trillion ($42.8 billion) in fiscal 2016. The company has yet, however, to file audited financial results, even though they were due by the end of June, because it cannot get an auditor to sign off on these results; hence, the demotion to the second section of the Tokyo exchange. Meanwhile, Toshiba is struggling to sell its flash memory chip business by the end of fiscal 2017 to avoid another enormous net loss, negative shareholder equity, and its delisting from the Tokyo Stock Exchange.
Toshiba Tec, which handles Toshiba’s printer and MFP business and is operated independently from Toshiba, is more financially healthy than Toshiba Corporation, and Toshiba Tec’s share continue to be traded on the first section of the Tokyo exchange. Still, we have been eyeing Toshiba’s crisis and the chip unit sale on which the company is pinning its hope anxiously because, if the sale flounders, we expect Toshiba would have to sell other assets—potentially including its stake in Toshiba Tec.
Epson is a much smaller company in terms of annual turnover than Toshiba. In fiscal 2016, Epson had revenue of ¥1.025 trillion ($9.1 billion) versus Toshiba’s ¥4.87 trillion ($42.8 billion). However, even in what was a year of sharp declines for Epson, it had a net profit of ¥48.4 billion ($425.2 million) (see “Epson Closes the Books on Downbeat 2016, Looks Forward to Growing Again in 2017”).
While Epson is facing pressure in the form of declining demand for cartridge-based consumer inkjets, the firm has seen growth in demand for printers that use refillable high-capacity ink tanks, especially in emerging markets. As a result, Epson is seeing its business grow faster than its rivals both worldwide and in emerging markets. IDC has reported that Epson is seeing stronger hardcopy peripheral shipment growth than other top vendors worldwide (see “IDC Says Worldwide Hardcopy Peripheral Shipments Grew for Second Straight Quarter”). Meanwhile, IDC revealed that Epson has for the first time ever replaced HP as the number-one inkjet printer vendor in India (see “IDC Reports India’s Printer and MFP Market Returned to Growth in Q1 2017”).
We look forward to continuing to follow the fortunes of Toshiba, Toshiba Tec, and Epson. We expect to hear more about Toshiba Tec’s and Epson’s financial performance when they report first-quarter financial results later this summer.
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