Japan’s Sharp to cut 6,000 Jobs in Global Restructuring: source
Japan’s loss-making Sharp Corp (6753.T) 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.
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.
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.
But Sharp, which supplies screens to Apple Inc (AAPL.O) 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.
Source: Reuters
