The biggest crisis in Toshiba Corp.’s 140-year history gives President Masashi Muromachi an opportunity to push through painful reforms from layoffs to business closures, accelerating the industrial conglomerate’s move away from consumer electronics.

Revelations that management was complicit in padding profits for almost seven years have cost the Japanese household brand 40 percent of its value and resulted in a record fine. Muromachi now plans far-reaching changes that may encompass selling the personal computer and appliance businesses -- money-losing divisions the company long refused to abandon.

Toshiba, which made the world’s first laptop computer and first DVD player, has clung to legacy consumer-electronics businesses that are wilting under pressure from Samsung Electronics Co. and Chinese manufacturers. As domestic competitors Panasonic Corp. and Mitsubishi Electric Corp. shift away from consumer products, Toshiba has lagged behind, relying on profit from semiconductors and power generation to subsidize TVs and computers.
“The crisis allows them to make bold moves,” said Mitsushige Akino, Tokyo-based executive officer at Ichiyoshi Asset Management Co., which doesn’t hold Toshiba shares. “There is opportunity, if they are willing to take it.”

“They could really use this opportunity to deal with low-profitability businesses, sell them off or merge operations with rivals,” said Masahiko Ishino, an analyst at Tokai Tokyo Securities. “The timing seems good for letting go of things.”

Toshiba, which employs almost 200,000 people, may cut as many as 7,000 workers, the Nikkei newspaper reported this month. The company also is considering withdrawing from TV development and closing a research facility in west Tokyo, according to the report.

Flash Memory
The company may also establish a subsidiary for its flash memory joint venture with SanDisk Corp. and would consider listing, Kyodo reported Friday, citing unidentified people. Toshiba responded with a statement saying it’s looking at ways to improve competitiveness in the business, but nothing has been decided.

The company, which also makes nuclear power plants, has made profit writedowns of more than $1.2 billion since the scandal broke. Japan’s securities regulator recommended fining the company about 7.37 billion yen for falsifying earnings, the largest financial penalty ever sought by the watchdog.

Toshiba is unloading assets to raise cash. It signed a final agreement Dec. 4 to sell its image-sensor chip operations to Sony and sold stakes in Finnish escalator maker Kone Oyj and Japanese medical equipment manufacturer Topcon Corp.

“There’ll probably be a second and third round of restructuring,” said Hiroyasu Nishikawa, an equity analyst at Iwai Cosmo Securities Co. in Tokyo.