DMR News

Advancing Digital Conversations

Toshiba CEO Satoshi Tsunakawa Steps Down Amid Restructuring Efforts

BySheldon Wong

Mar 12, 2022
satoshi tsunakawa

Toshiba CEO Satoshi Tsunakawa Steps Down Amid Restructuring Efforts

Toshiba, one of Japan’s largest industrial and electrical equipment conglomerates takes another blow as Satoshi Tsunakawa resigns amid organization restructuring efforts.

Toshiba has clarified that Taro Shimada who is an executive officer and a senior corporate vice president will take the reins hereon. Tara Shimada has been an executive at Siemens AG in Japan and US, working in its digital operations team.

Although the credibility of the new CEO seems good enough, the concerning fact is that Taro Shimada only joined Toshiba in the year 2018. Which makes people wonder if it is the right decision to hand over the reins of such a big conglomerate to a person who has been with the company for less than three and a half years.

Taro Shimada has said that his experience in digital technology will be a plus point for Toshiba’s energy business.

The biggest challenge for Shimada would be to win over the shareholders and revive their trust in Toshiba again. Toshiba has suffered several blows, from March 2011’s Fukushima nuclear disaster that destroyed 3 of its major reactors to its most recent Billion dollar accounting scandal in 2015.

Since these incidents, Toshiba and its management have been struggling to regain shareholders’ trust. Many of Toshiba’s foreign shareholders have proposed to look for buyout options from private equity firms as well. Such a move can hurt Toshiba’s valuation further.

Satoshi Tsunakawa had managed to hold the corporation through some of the toughest times the firm had faced during its lifetime, including the Billion dollar accounting scandal of 2015.

The original idea for restructuring involved dividing Toshiba Group of entities into three different entities of electronic devices, infrastructure, and a holding company to manage the other two. This idea was quashed by a group of hedge fund investors of Toshiba group who together hold close to 30% of this conglomerate.

Since, the rejection of the original idea, the management team has been trying to run a different idea with its investors to split the company into two entities rather than three. Several investors are still pushing for the buyout of the firm, instead of going ahead with the restructuring plans proposed by the management.

Although, Satoshi Tsunakawa has shown trust and expressed achievement of handing over the leadership group to the next generation hoping that the shareholders, customers, and employees be good with the restructuring plans.

Toshiba, founded in 1875, is one of the oldest and most reputable conglomerates of Japan. It has seen all sorts of ups and downs during its long course of business, but the past decade has been a little too rough for this giant, and this may be the last chance for Toshiba to get back on its feet and gain investor confidence in its future and operations.

Toshiba still has several product lines thriving for regular business operations and revival. So, if its management can bring back investors’ confidence with its restructuring plans, then it can have a large impact on how Toshiba will look after a decade.

Sheldon Wong

Sheldon was a contributor on DMR. He has since left the team to pursue his career in the Insurance industry.