Toshiba shares skid 17 pct on accounting probe; $2.5 billion wiped off market value

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Fears Toshiba Corp’s second probe into its own accounting in two years wiped close to $2.5 billion off the Japanese industrial giant’s market value on Monday, with analysts saying lingering doubt on the root of the problem will keep investors on edge.

Shares in Toshiba tumbled by their daily limit of 17 percent on Monday. The company said after the market close on it was withdrawing its earnings guidance for the fiscal year ended March and cancelling a year-end dividend due as it expanded a previously announced investigation.

The stock closed 16.6 percent lower at 403.30 yen in Tokyo on Monday, giving the company an overall market value of about 1.7 trillion, close to 300 billion lower than Friday’s close.

Toshiba had warned in April that it may have underreported costs of some infrastructure projects in the 2012/13 fiscal year. On Friday it said an internal probe, its second in less than two years, found other irregularities, including a failure to adequately book losses related to construction work.[pro_ad_display_adzone id=”70560″]

“The new development…is worsening further,” said Fumio Matsumoto, fund manager at Dalton Capital Japan. “At the end of the day, the amount that’s affected may or may not that big, but the fact that we don’t have details leaves worried.”

Toshiba said it would up a third-party to further investigate, and that it could not report its financial results for the year that ended in March, normally announced around this time, until June or later.

Dalton’s Matsumoto also said that portfolio managers may face questions from clients on why they should retain Toshiba shares.

“If you are an active fund manager and own Toshiba stock and are overweight on it, you really need a strong reason to justify the reason of holding the stock when you are required to give explanations to your clients,” he said.

The latest probe follows Toshiba’s October 2013 announcement that it found its subsidiary, Toshiba Medical Information Systems, had overstated results for several years.

For the 2013 business year, Toshiba’s energy and infrastructure unit – which includes the part of the company the sales of 1.8 trillion yen, up 11 pct year-on-year, and operating income of 32.3 billion yen, down 62 percent.

(Reporting by Ayai Tomisawa and Ritsuko Ando; Editing by Kenneth Maxwell)