TOKYO -Japan's Toshiba Corp slashed its annual earnings estimate after third-quarter profit slumped, while its chief operating officer resigned over the inappropriate use of entertainment expenses some years ago.

Hit by weak demand for hard disk drives due to reduced investments in data, Toshiba said quarterly operating profit tumbled 88% to 5.3 billion yen ($40.4 million), far less than a Refinitiv consensus estimate of 37 billion yen.

The industrial conglomerate also took a large charge relating to an old project for its power generation systems business.

Its profit estimate for the year ending in March was cut by a quarter to 95 billion yen.

Toshiba said COO Goro Yanase had resigned over the inappropriate use of entertainment expenses in 2019 when he was an executive at a company unit.

The statement about his resignation did not mention who would be replacing him.

The weak performance and departure of Yanase come at a time when the scandal-ridden industrial conglomerate is assessing a binding buyout proposal from a consortium led by private equity firm Japan Industrial Partners (JIP).

The consortium submitted its formal proposal last week, after sources said the investors had secured 1.4 trillion yen ($10.6 billion) in loan commitments for their buyout including a commitment line of 200 billion yen for working capital.

The final buyout proposal would also include an equity portion of about 1 trillion yen, the sources said, adding that many details of the potential deal have to yet to be fixed.

A buyout, if successful, would draw a line under years of drama for the industrial conglomerate ranging from accounting scandals, heavy losses, corporate governance concerns as well as friction with activist investors that led to a strategic review.

  - Reuters