Japan's
Sharp to cut 6,000 jobs in global restructuring: source
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[March 19, 2015]
TOKYO (Reuters) - Japan's
loss-making Sharp Corp intends to cut 12 percent of its workforce in a
global restructuring expected to cost more than $1.7 billion, a person
familiar with the plan said on Thursday.
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The job cuts will total around 6,000, half of which would come in
Japan through early retirement while the rest would be overseas,
according to the person, who was briefed on the matter but declined
to be identified as a formal decision has not been made.
On track for its third annual net loss in four years, the LCD screen
and consumer electronics manufacturer has been in talks with banks,
seeking to secure its second major bailout since 2012 while working
on a fresh plan to overhaul its business.
Sources have said a debt-to-equity swap would be a logical option
and that Sharp has also asked Japan Industrial Solutions, a
corporate turnaround fund, to invest up to $250 million in capital.
The person who spoke to Reuters on Thursday said a debt-to-equity
swap and an investment from the fund would likely help cover the
restructuring costs of more than 200 billion yen.
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Sharp declined to comment on reports of restructuring plans, saying
that it has not made any announcements.
Expectations that Sharp would embark on further restructuring with
the blessing of its banks helped its shares end 2.2 percent higher.
NO LCD OVERHAUL
Any decision to slash headcount would come on top of 5,000 jobs cut
in Sharp's previous round of restructuring that began three years
ago when it was bailed out by banks with loans and credit lines
worth 360 billion yen, or $3 billion at today's exchange rates.
Media reports have also said new steps that Sharp may embark on
include shedding its North American television business, lowering
pay for workers in Japan, shutting a TV factory in Mexico and
cutting the size of its North American sales division.
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But Sharp, which supplies screens to Apple Inc and other smartphone
makers, so far seems unwilling to bite the bullet on problems in its
LCD panel business, said UBS analyst Ryosuke Katsura who reiterated
a "sell" rating on its shares.
"Sharp's LCD panel factories are currently operating at close to
full capacity, but with demand limited... we believe inventories are
building up, which is a problem the firm seems to be putting off,"
he said.
There has also been much speculation that Sharp's LCD business,
which accounts for the bulk of its profits, would be better off if
was bought by rival Japan Display Inc <6740.T> which has staged a
strong comeback to eat into Sharp's sales of smartphone screens in
China. Sharp has denied that it is considering such a move.
(Reporting by Tokyo Newsroom; Writing by Ritsuko Ando; Editing by
Kenneth Maxwell and Edwina Gibbs)
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