Toshiba CEO Hisao Tanaka stepped down Tuesday following the unveileing that the Japanese company had been inflated profits at the by 151.8 billion yen ($1.2 billion). Toshiba acknowledged a systematic cover-up, which began in 2008, as various parts of its sprawling business including computer chips and personal computers were struggling financially, but top managers set unrealistic earnings targets under the banner of "challenge" and faked results.

"We have a serious responsibility," Tanaka told reporters. The company will need to "build a new structure" to reform itself, he said.

The inflation of profits to meet targets was carried out not only on one or two projects, but across the board, sometimes because the projects weren't even breaking even, according to the report of an investigation.

Tanaka will be replaced by Masashi Muromachi, chairman of the board.