Missing forecasts by a fifth and undershooting new year estimates by a quarter would be enough to upset most investors. But Toshiba’s poor operating numbers and cautious outlook do not explain why US investors in particular have disliked the Japanese company for so long. Their holdings account for just 7 per cent of the company, according to Bloomberg. That is half the level of three years ago – and even that was well below the one-quarter stakes Americans hold in Sony or Hitachi.
US investors are the second-biggest holders, usually by a long way, of Japan’s biggest and best-known groups. So what is it about Toshiba? Perhaps they have given up trying to follow a company with products ranging from TVs and tablets to traffic control systems and trains. Such diverse operations (find the synergies in vacuum cleaners, memory chips and nuclear reactors) are a potential barrier to investment. But Japan hands know the score: Toshiba’s 40-plus products in five divisions are no worse than the hodgepodge of Hitachi or Panasonic, in which US investors hold 23 per cent and 16 per cent respectively. It is unlikely to be about returns either: over three years Toshiba has delivered a fifth against a sector return of 5 per cent. In the past six months its share gains mean it has returned almost 100 per cent against two-fifths for the industry.
Americans are not everything, of course. Probably a fifth or more of Toshiba stock is held outside Japan in total. But their absence is notable when on average they hold a fifth of Japan’s most-traded stocks. Toshiba’s outlook is unlikely to incite a rush of buying. Words such as “moderate” and “uncertain” abound. Its Y260bn operating profit forecast for the year to March 2014 is ironically the number it missed this year. Japanese executives are not known for their boundless optimism. For once, US investors seem to be in accord.
