Western Digital warns Toshiba that splitting off its chip unit prior to a planned sale of the business would violate their joint chip venture contract. As David Pollard reports, the objection is likely to complicate the sale of the prized unit - valued at around $18 billion.
Slow progress for Toshiba as it tries to get back on track. And perhaps even slower now as Western Digital raises a red flag. The California-based company objecting to any splitting off of Toshiba's chip unit prior to its sale. That, it says, would breach a joint venture agreement it already has with Toshiba. Warning it will not sit idly by while Toshiba 'runs roughshod' over its rights. (SOUNDBITE) (English) WILSON KING INVESTMENT MANAGEMENT, HEAD OF RESEARCH, RICHARD HUNTER, SAYING: "It's hit an immediate bump in the road with this intervention by Western Digital, which itself, as a result of the join venture it currently has with Toshiba, wishes to make some sort of approach. And in so doing is also pouring some fairly cold water over some of the potential rival bidders." Toshiba could raise $18 billion dollars from selling its prized chip unit. Money it desperately needs to cover writedowns from its failed US nuclear unit, Westinghouse. Along with Western Digital, SK Hynix and Foxconn have also been seen in the frame to make a bid. But Western Digital now says it wants exclusive talks - while also raising concerns over other bidders - and adding Broadcom to that list. Analysts say the apparent rift will do little to soothe investor nerves .... Coming just a day after Toshiba filed a nearly five billion dollars net loss - in accounts that hadn't been signed off by auditors. (SOUNDBITE) (English) WILSON KING INVESTMENT MANAGEMENT, HEAD OF RESEARCH, RICHARD HUNTER, SAYING: "It's very important from both the company's point of view and indeed it will also be important to shareholders that these fully-audited accounts are released to the market as quickly as possible." The company had already delayed its earnings twice. And authorities could now force it to delist from the Tokyo stock exchange.