TOKYO -- Toshiba Corp. today took a special charge of $1 billion to reflect costs of settling a U.S. class action lawsuit that had alleged defective PCs were sold by the world's largest notebook maker.
The suit, filed in federal district court in Beaumont, Tex., had claimed that floppy disk drive controllers in the PCs caused loss of data. Without admitting the charges in the suit, Toshiba agreed to provide a $200 to $225 coupon to all PC owners under warranty as of March 5, 1999 and a $100 coupon to all owners of PCs out of warranty. The settlement applies only to U.S. buyers of Toshiba PCs.
The firm also agreed to make cash refunds for recent PC purchasers. Toshiba officials said the case was settled because "there was a serious risk that a substantial amount of compensation could be awarded through a jury verdict" if the case came to trial. Toshiba also said it wanted to protect its brand name. Not surprisingly, Toshiba said it has replaced the floppy disk drive controller in its PCs.
Toshiba subsequently revised its financial forecast for the fiscal year ending March 31, 2000 to expect a $480 million (50 billion yen) net loss. The firm only days earlier had estimated a fiscal year net loss half this amount. Toshiba had also reported a net loss of $440 million for the first fiscal half ended Sept. 30 (see Oct. 26 story).