Toshiba fleshes out restructuring, cuts

The Irvine, Calif., company will consolidate several product divisions and, as previously reported, cut 200 jobs, leaving it with 1,050 employees, the company confirmed on Thursday afternoon.

TAIS said the reorganization will be made official Oct. 1. The layoffs will occur over about six months.

TAIS, as the company is commonly called, will shift from five product divisions to three, consolidating merchandise such as PCs and personal digital assistants into a new Digital Products Division.

A second product unit, the Digital Solutions Division, will pursue emerging businesses, such as mobile communications systems that combine data and voice. The division will handle sales of Toshiba servers, as well as network gear like Wi-Fi hot spots and cable modems. It will also manage telecommunications gear and imaging systems.

A third product unit, the Storage Device Division, will remain essentially as is, building optical drives and hard drives.

A fourth, nonproduct group, TAIS Operations, will handle logistics and manage the company's supply chain, product engineering and tech support. The division has been handed an important job, as TAIS will look to it to help cut costs by streamlining its supply chain and product distribution, said Mark Simons, head of the new Digital Products Division.

"In striving for operational efficiencies...one of our major efforts is to improve our supply chain," Simons said.

TAIS is far from the first PC company to undergo reorganization since the PC market downturn began during late 2000. But it's also no secret that Toshiba suffered slower notebook unit shipments both worldwide and in the U.S. market during the second quarter.

Toshiba's unit shipments of notebook PCs declined by 22 percent sequentially in the United States, while overall unit sales increased by 8 percent during the quarter, according to market researcher IDC.

Simons said, however, that the lackluster quarter influenced only the timing of the reorganization plan.

"It's not because of the (second quarter) performance. This is a plan that's been thought out and worked on for some time," Simons said. "The (second quarter) performance, though--that's why we thought, We have to do it now."

But analysts said a shake-up was needed following the quarter.

"The story is that in the strong demand climate we're seeing now in the U.S., Toshiba's notebook shipments still fell 22 percent sequentially, while the industry grew at 8 percent," said Alan Promisel, an analyst with IDC. "The sudden shake-up could also be an indication of its third-quarter performance so far."

While it will add some new products, TAIS will also be working to refine its current line of corporate notebooks.

"You'll continue to see us develop new mobile products to take to the marketplace," Simons said.

For example, the company launched a less-expensive Tecra notebook for smaller businesses in July.

Toshiba might make some changes in its Irvine product configuration center, which handles final assembly of notebooks, but one thing that won't change is how the company sells its PCs.

Toshiba will continue sell direct and also through distributors, Simons said.

"We remain committed to the end user. The end users' requirements will determine the choice of fulfillment," Simons said.

However extensive the changes are at TAIS, they don't affect any of the several other Toshiba divisions that operate in the United States.