Maybe a U.S. Nuclear Revival
Leonard Hyman is an economist and financial analyst specializing in the energy and regulated sectors. He was formerly head of utility equity research at Merrill Lynch and senior advisor to investment banking at Salomon Smith Barney. William Tilles was a bond analyst, stock analyst and managed long/short equity portfolios for hedge funds. He is a senior industry advisor and speaker on energy and finance.
Toshiba, the giant Japanese electronics and electrical equipment manufacturer, recently announced that financial write-offs related to its troubled nuclear division, Westinghouse Electric, would total approximately several hundred billion yen, or approximately $6.2 billion dollars. That did more than upset financial markets.
Since the write-off announcements, Toshiba's stock price has been cut in half. Moody's bond rating agency placed a way-below-investment-grade rating of CAA1 on the company's debt. How bad is that? A financial analyst looking at that bond rating might understandably start humming Bob Dylan's "Knocking on Heaven's Door."
This write-off ends the story of one of the most poorly timed mergers and acquisitions strategies in recent corporate history. Toshiba purchased Westinghouse Electric in 2006 and subsequently purchased Chicago Bridge and Iron's nuclear engineering division, Stone & Webster. Now, in order survive financially, it must extricate itself from these loss-making operations. But that is history.