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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 U.S. 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 three years ago – and even that was well below the one-quarter Americans hold of Sony or Hitachi.
U.S. investors are the second-biggest holder, 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 that's wares range from TVs and tablets to traffic control systems and trains.
Such diverse operations (please find the synergies between vacuum cleaners, memory chips and nuclear reactors) are potentially a 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 whom U.S. investors hold 23 and 16 per cent, respectively.
It is unlikely to be about returns either, since 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 alone hold a fifth of Japan's most-traded stocks. Toshiba's outlook is unlikely to incite a rush of buying, either. Words like moderate and uncertain abound.
Its ¥260-billion ($2.6-billion) operating profit for March, 2014, is ironically the number it just missed for this year – even as analysts were looking for something nearer ¥340-billion. Japanese executives are not known for their boundless optimism. For once, U.S. investors seem to be in accord.