Toshiba to spin off business units

  • Rob Guth (ARN)
  • 04 February, 1998 14:20

Toshiba, challenged by a tough economy at home and by a troubled PC business abroad, will spin off business units over the next two years in an effort to become both leaner and more agile, the head of the integrated computer and electronics maker said late last week.

Taizo Nishimuro, president and CEO of the Tokyo-based company, also outlined general plans for Toshiba's key business areas in an annual press briefing to mark the beginning of the new calendar year.

Nishimuro would not give a specific time frame for when he would take the unprecedented move, but emphasised the plan to spin out the company's businesses is part of his long-term mission to turn Toshiba into a more fleet-footed competitor.

"Since I became CEO in June 1996, I have been emphasising the urgent need to change the way we think about and operate our company," he said.

"We are in the process of repositioning ourselves to become what I call a more agile company."

To achieve that goal Toshiba will take "every thinkable measure", to transform itself which includes decentralising operations by setting up a holding company structure, he said.

"The timing is not decided, but I want to see some concrete results within a year or two," Nishimuro said.

Though holding companies have not been allowed in Japan since the end of World War II, the Japanese government is now reworking that law to restructure telecomms giant Nippon Telegraph & Telephone into a holding company structure. Other companies are now considering similar moves.

Though Nishimuro would not identify specifically which of Toshiba's many business areas would be first to break off, in an interview with IDG following his comments, he said the company's computer and networking group is being considered as a potential spin off.

Toshiba would not likely spin out its PC business, he said. The future growth of PCs will depend on PC integration with servers and networks, Nishimuro added. To break out Toshiba's PC business, would "almost mean we are cutting the ties to the growth", he said in the interview.