|
 But while new restructuring measures will include 5,000 job cuts or
10 percent of its global workforce as well as the sale of its
headquarters, the steps were seen as not going far enough.
Chief Executive Kozo Takahashi said he was not considering spinning
off the company's troubled display business and would continue
making TVs in Japan, leaving investors doubting the company's
long-term viability.
"The current business model is not convincing," said Mitsushige
Akino, chief fund manager at Ichiyoshi Asset Management. "It has
cutting-edge display technology but it's not profitable."
Under the deal, main lenders Mizuho Bank and Bank of
Tokyo-Mitsubishi UFJ will inject a combined 200 billion yen ($1.7
billion) in a debt-for-equity swap.
Japan Industrial Solutions, a corporate turnaround fund owned by a
consortium that includes the two banks, will also provide 25 billion
yen in return for preferred shares.
But while its lenders signed off on the bailout, they did not view
Sharp's restructuring measures as complete. A senior official at one
of Sharp's main banks said the announcement lacked a solid
turnaround plan for the display business.
"Consideration of more measures including possible mergers are
necessary. That's going to take time," the banker said, declining to
be identified due to the sensitivity of the matter.
MISTAKES WERE MADE
Sharp, once Apple Inc's most favored supplier, posted an annual net
loss of 222 billion yen, its third loss in four years, with
Takahashi blaming a rapid deterioration in its operating environment
in the second half.
He acknowledged management was also to blame for the loss but said
he had no plans to step down, at least for the duration of the
three-year restructuring plan unveiled on Thursday.
"Of course, if we hadn't make mistakes we wouldn't be in this
situation," he told a news conference. "I was central to making this
medium-term plan, so I can't possibly quit in the middle of it."
He said the company would aim for a return to operating profit,
setting a goal of 80 billion yen for the current year and 120
billion yen two years later.
Osaka-based Sharp, which gains much of its revenue from LCD screens
and TVs, has tried to focus on high-end displays to protect its
margins and avoid directly competing with smaller Asian rivals.
[to top of second column] |
But it has struggled to innovate sufficiently to keep commanding
significant premiums from the likes of Apple. In addition to Chinese
competitors, it has also faced unexpectedly strong competition from
domestic rival Japan Display Inc and has been hit by a weaker yen.
In return for the funding, which will be used to repay debt and
finance investments, Sharp will also sell its headquarters and said
it might seek a partner for its TV business in North America.
That would follow the licensing of its TV brand in Europe to
Universal Media Corp, effectively focusing the company's resources
on Japan and the rest of Asia.
Sharp also said it would reduce its capital to 500 million yen from
over 120 billion yen to wipe out cumulative losses on its books - a
move that paves the way for resumption of dividends and was seen as
key to getting the banks to agree to a deal.
The shares closed on Thursday at 200 yen, down 1 percent on the day
and down 25 percent for the year to date. Its market capitalization
has shrunk to 355 billion yen from a peak of 3 trillion yen in late
1999.
The rescue is the second since September 2012 when banks provided
Sharp with loans and credit lines worth 360 billion yen, or $3
billion at today's exchange rates.
(Reporting by Ritsuko Ando and Taiga Uranaka; Additional reporting
by Ayai Tomisawa and Chang-Ran Kim; Editing by Edwina Gibbs)
[© 2015 Thomson Reuters. All rights
reserved.] Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
|
