The Strategist

Japanese Sharp takes a new course

08/22/2016 - 16:28

Japan's Sharp Corporation will hold a large-scale restructuring to return the business to a profitable level, and restore confidence in the consumer electronics brand.

New CEO of Sharp Tai Jeng-wu said that his mission "as Sharp’s leader is to turn situation in the company for better without delay". 

Tai Jeng-wu chaired Sharp after Taiwan's Foxconn Technology Electronics bought the Japanese manufacturer. In April this year, the company formally signed a purchase agreement with Foxconn. The latter aimed to get controlling stake in Sharp shares, worth 389 billion yen ($ 3.5 billion).

According to Tai Jeng-wu, Sharp will invest heavily in research and development, while Foxconn will provide assistance to the Japanese company in terms of production capacity and supply of components.

Sharp’s restructuring is necessary, and will reduction of stuff, he said. Earlier, representatives of the Japanese electronics manufacturer told that reorganization of operations will require a massive corporate downsizing, mainly in overseas departments of the company.

Sharp, which is considered as a developer of the first liquid crystal display, produced the first 3-inch TV on its basis in 1987. In its best years, the company had successfully sold premium TV devices, yet lack of innovation and price pressure from Asian competitors made Sharp’s television business unprofitable.

"High yield of 4K TVs production led to the fact that increasingly more manufacturers are offering their new products under this label, which leads to fierce competition in the market. Meanwhile, pricing strategies of Chinese and South Korean producers hamper possibilities for the Japanese company’s success", - explained Money DJ in its last year's report. 

Return it to profit Kenichi Kodanev promised in the current fiscal year, which started in the beginning of April 2016, due to the high demand for 4K-model in Japan. At the end of the current reporting year, the company expects a loss of 13 billion yen ($ 105.6 million) in its television sets division.

Previously, Japanese media reported that Sharp demanded from its employees to buy the company's products. Thus, each top manager at the end of January 2016 must buy a TV or other Sharp electronics worth more than $ 1 600. Non-management employees need to spend a more than $ 400.

Sharp’s representative Kyo Ontani told BBC that the company’s staff is actually allowed to buy its production, but there are no requirements to volume of purchases, and employees are free to decide whether or not purchase Sharp’s products.

Earlier, Taiwanese state company Foxconn, engaged in assembly of electronic devices including iPhone and iPad, has completed acquisition of Sharp, reported Financial Times. The publication said that approval of the Taiwanese antitrust regulator was a signal for the transaction’s end.

After Foxconn’s statement, made in the middle of August, Sharp's shares Friday rose by 19%, to ¥ 106 ($ 1.05) per share on the Tokyo Stock Exchange. 

The deal between the two companies was signed in March. Foxconn has agreed to pay $ 3.8 bln for two thirds of Sharp’s shares. The deal will allow the Taiwanese firm to gain access to the Japanese solar cell production technology and liquid crystal displays, said the FT.

Sharp itself said that full payment under the agreement has already been made, and the company received a syndicated loan of ¥ 300 billion ($ 2.96 billion) from two Japanese banks.


< >

Thursday, May 16th 2024 - 03:10 HSBC starts looking for new CEO