Toshiba asset-swap shock: Western Digital is not impressed Loss-ridden Toshiba has pulled an unexpected move which it hopes will allow it to auction off its flash memory unit for a big pile of cash within the month. It says it has reabsorbed assets from its flash foundry JV with Western Digital Corp. In a letter obtained by the Financial Times, Toshiba’s lawyers announced it is …
No.
It is Toshiba, not Sandisk (owned by WDC) who is allegedly breaching the terms of the JV contract.
The JV contract requires the approval of the other party before selling off or otherwise transferring assets belonging to the JV, and Toshiba has not sought that approval.
Toshiba unilaterally transferred it's ownership stake in the JV to a newly created company it formed for the purpose. This is against the terms of the JV.
There is nothing wrong with Sandisk enforcing the terms of the JV.
By playing in the wrong industry. The astonishingly large losses stem from Toshiba's participation in the nuclear energy industry, which has a cost structure starkly unbelievable to most people, and has been crushed three times over: first by the various nuclear safety scares in recent decades, especially Fukushima: second by constantly escalating construction costs and associated delays; and third by the rapidly dropping cost of competing technologies, first wind, then solar, and now storage. Not to mention very low gas prices in the USA since the fracking revolution.
The result is that there is very little construction activity at present. Making matters worse for Toshiba, they expanded their stake in the industry at the wrong time, buying up competitors when they should have been selling out while their operation was still worth something. Making matters worse still, they paid way over top dollar for a nuclear plant construction company in the States which turned out to be very badly run, to be facing huge contractual difficulties and cost overruns, and to be near enough to bankrupt as makes no difference.
Asleep at the wheel? Too right they were. Asleep and dreaming chemically assisted technicolour dreams. Right royally shafted? Yep. Exactly that. And now they owe a truly massive amount of money, borrowed to buy a worthless, unsaleable asset in a dying industry that loses money hand over fist and will never show a profit, and the only way to pay off the loan is to sell the electronics operations - i.e., stop doing the thing that they are actually good at.
Damn shame. Toshiba's electronic stuff was great.
IIRC Boeing was quite keen to sell ULA to AJR, who mfg the RS68 on the delta and rebox mfg the RD 180 on the Atlas V and RL10 (more touch labor than a Lamborghini)
LockMart, not so much. They forbid the sale and ULA remains a JV of Boeing & LM.
Bad news for AJR. When Vulcan flies, assuming Blue Origin delivers that looses themRS68 and RD180 and with ACES upper stage probably RL10. No wonder they were desperate to talk their way onto the XS-1 progrqamme (won by Boeing) with talk of a pair of new built SSME's (well "new built" from the spares around the workshop, not actually mfg from scratch today).
I suspect a round of serious whining lobbying as AJR tell the USG they are "too big to fail" and that (future) National Security" needs will depend on them, as they are the only "independent" engine supplier (provided you limit the list to a)Big and b)American).
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