Toshiba: Where did it all go wrong?

Who would've thought a decade ago when the Japanese technology conglomerate, Toshiba, decided to pour billions into the acquisition of Westinghouse, a company that designs, manufactures and commissions nuclear plants, would be staring down the barrel of bankruptcy after management told shareholders of it's intentions to absorb a mammoth $6.3 billion writedown of the business?

This is what management's expressed views was following a failure to release it's financial results and having to seek permission for an extension of a month from the Japanese securities regulator to finalise an approval from auditors in presenting the figures.

Toshiba to take $6.3 billion hit on U.S nuclear unit https://t.co/P59OfnCDEx

— Reuters Top News (@Reuters) February 14, 2017

You would've been forgiven had you thought the demand for energy production was set to expand into the early to mid 2010's considering the exponential growth experienced in China as well as the uncertain relations between the Western World and the Middle East over the dominance of the energy market, more particular the oil price.

Alternative ways of powering the economy were a hotbed of political conversation with policymakers pushing the agenda at every possible moment as if to ascend it's level of priority closer to the top of the pile.

How did Toshiba get it all wrong?

Although the drive to innovations in the energy sector was seen to be a lucrative opportunity for most investors, the parts of the industry that received the most attention were those promoting renewable energy, as well as the inclusion of the production of synthetic fuel from natural gas in an bid to bypass conventional means of importing gasoline.

Nuclear energy hardly featured in any future plans, let alone presented a favourable space for investment when weighing up the unfavourability as an option, led by European leaders who drove their ambitions of powering their entire nations on green energy.

And let's not forget about the Fukushima nuclear disaster of 2011 where a lapse of judgement in safety precautions were eventually exposed during an occurrence of a devastating tsunami that damaged the reputation of Japanese expertise in the field of nuclear.  

Why the world superpowers matter most? 

One of the major characteristics when it comes to investing in energy production is the issue of intensity in the amount of funds needed to finance these projects. Because of the scale and timeframes of these projects it's usually governments that become the decisive factor.

Evaluating the production playing field in terms of energy, it's easily known that developed economies consume the greater share of total production than their emerging counterparts, translating into a higher level of investment to keep the system current.

Although emerging markets may be flirting with the idea of introducing nuclear in the not so distant future, it's the developed nations who provide the biggest source of revenue generation and when considering that most of these countries have chosen to move away from it doesn't bode well for companies like Toshiba.