Toshiba stock plunges 17% on news of accounting probe

Toshiba Corp. stock fell 17 per cent in trading in Tokyo Monday, wiping $3 billion Cdn. off its market value.

The plunge came after the company made an announcement after markets closed Friday that it would expand an investigation into its own accounting.

The company cancelled a year-end dividend and withdrew its earnings guidance for the year to March 2015.

The company had projected net income of 120 billion yen ($1.2 billion) on sales of 6.7 trillion yen in the year ended March.

The 16.6 per cent drop in the stock's value was the maximum permitted on the Tokyo exchange.

Toshiba had warned in April that it may have underreported costs of some infrastructure projects in the 2012/13 fiscal year. On Friday it said a second internal probe had found yet more irregularities, including a failure to adequately book losses related to construction work.

That follows on a 2013 revelation that Toshiba Medical Information Systems, its medical division, had overstated results for several years.

Toshiba, which makes nuclear reactors, computer memory chips and consumer electronics and controls Westinghouse Electric Co., said it would not have results for its 2014 fiscal year until June, much later than anticipated. It also might have restate earnings from previous years.

"The new developmentis worsening uncertainty further," said Fumio Matsumoto, fund manager at Dalton Capital Japan told Reuters. "At the end of the day, the amount that's affected may or may not that big, but the fact that we don't have details leaves us worried."