News & Analysis
Sharp to slash 5,000 jobs
Anne-Francoise Pele
8/2/2012 5:20 AM EDT
PARIS – Japan's Sharp Corp. reported a significantly wider fiscal first quarter loss and unveiled its intention to cut 5,000 jobs by the end of March 2013. This will be the company's first personal downsizing since 1950.
For the quarter ended June 30, Sharp posted a 138.40 billion yen net loss, up from 49.28 billion yen a year ago. The operating loss amounts to 94.13 billion yen, compared with a profit of 3.53 billion yen a year earlier. Revenue declined to 458.60 billion yen, compared with 640.35 billion yen.
Source: Sharp
Sharp, whose television, LCD and solar panel operations have been struggling, said the job reductions would contribute to cut fixed costs by 100 billion yen. The group had 56,756 employees worldwide in March 2012. The workforce is expected to be cut by nearly 9 percent, to 51,700 people, by March 2013.
In a financial presentation, the group noted that it would solicit voluntary retirement in addition to mandatory retirement and off-balance-sheet arrangements.
The personal downsizing represents one of the four restructuring initiatives the company unveiled yesterday (Aug. 1st) to "shift to growth areas". These initiatives include the reorganization of business groups with the consolidation to four business groups: Digital information appliances group; Health, Environment and Energy Solutions Group; Business Solutions Group; Devices Group.
The company also cited the review of framework at plants/bases with the downscaling of the Tochigi plant and the Katsuragi plant, as well as the head office streamlining.
On a side note, Sharp said it has revised its forecast of financial results for the six months, ending Sept. 30, 2012, and the year ending March 31, 2013, as well as the dividend forecast for the year ending March 31, 2013.
The company said this results from a sluggish business performance in the quarter, a more severe business environment than initially expected, including the risk of an economic downturn in the U.S., Europe and other regions, slow demand in Japan, as well as restructuring charges.
For the quarter ended June 30, Sharp posted a 138.40 billion yen net loss, up from 49.28 billion yen a year ago. The operating loss amounts to 94.13 billion yen, compared with a profit of 3.53 billion yen a year earlier. Revenue declined to 458.60 billion yen, compared with 640.35 billion yen.
Source: Sharp
Sharp, whose television, LCD and solar panel operations have been struggling, said the job reductions would contribute to cut fixed costs by 100 billion yen. The group had 56,756 employees worldwide in March 2012. The workforce is expected to be cut by nearly 9 percent, to 51,700 people, by March 2013.
In a financial presentation, the group noted that it would solicit voluntary retirement in addition to mandatory retirement and off-balance-sheet arrangements.
The personal downsizing represents one of the four restructuring initiatives the company unveiled yesterday (Aug. 1st) to "shift to growth areas". These initiatives include the reorganization of business groups with the consolidation to four business groups: Digital information appliances group; Health, Environment and Energy Solutions Group; Business Solutions Group; Devices Group.
The company also cited the review of framework at plants/bases with the downscaling of the Tochigi plant and the Katsuragi plant, as well as the head office streamlining.
On a side note, Sharp said it has revised its forecast of financial results for the six months, ending Sept. 30, 2012, and the year ending March 31, 2013, as well as the dividend forecast for the year ending March 31, 2013.
The company said this results from a sluggish business performance in the quarter, a more severe business environment than initially expected, including the risk of an economic downturn in the U.S., Europe and other regions, slow demand in Japan, as well as restructuring charges.
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anne-francoise.pele
8/2/2012 5:42 AM EDT
On a side note, Sharp explained that, in the second quarter, it will work on the steady improvement of profitability and financial position, while tackling the issues in businesses such as LCD TVs, small- and medium-size LCDs and large-size LCDs.
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goafrit
8/2/2012 4:21 PM EDT
If they have not been doing that, the CEO needs to step down. The problem is that it has not been working for Sharp.
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yjamal2k1
8/2/2012 8:36 AM EDT
What is wrong with Japanese companies, first crisis erupted with Renesas and now Sharp is also in turmoil....
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goafrit
8/2/2012 4:20 PM EDT
If anyone can answer that question, he/she will win the Asian Nobel Prize for economics. They are on the way to death camp of business.
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eewiz
8/2/2012 9:52 AM EDT
@ yjamal2k1
You forgot Panasonic,Sony,NEC and many others. The fundamental problem with Japanese companies is that the world has moved on, and Japanese companies stood still.
BTW this layoff has got anything to do with Foxconn acquiring 10% stake in Sharp? Terry Gou brought some common sense back at Sharp management?
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goafrit
8/2/2012 4:22 PM EDT
Terry Gou cannot afford to pay the Japanese wage structure, so, he needs to cut manpower. It is a new world order and Japan is not getting it.
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skal_jp
8/2/2012 6:35 PM EDT
One of the problem with Japanese company is that they do not accept their weakness fast enough to anticipate next move. Sharp was confident on it's LCD technology and business model. Too much confident. Could not stand the blow from Samsung and other LG.
Another problem is that they are to much focused on the Japanese market and although through the past year things are changing, the change is too slow. Indeed there is now design center and production line for the local market everywhere, but the top guy are no locals (trust me I was there). On top of that the branch manager in Japan is send abroad and becomes the local CEO, but the truth is that the guy have no formation.
I would add that so far most of the executives were guys from the inside (Sony was an exception). The do not have real management formation. The have the internal formation, which is no good at all.
As for the Foxconn case.... Well no-one at the board will admit it but I think this is part of some non written agreement....
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selinz
8/2/2012 8:18 PM EDT
When a US company can beat you across the entire product line on price, you should be weary. Sharp is no longer perceived to be much better than the rest of the pack to justify premium pricing. (just talking about tvs here.)
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ledzep
8/2/2012 9:21 PM EDT
All TV set-makers focused too much on hi-end market are loosing even Samsung or LG. It's the industry's turing point. Furthermore Sharp has been the one concentrated too much in Japan i.e. non-global among them.
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docdivakar
8/3/2012 3:45 PM EDT
It seems like a 10% reduction in workforce in today's economy is not that unusual. It is sad that it is company's first personnel downsizing since 1950. So the question to ask the Sharp management is: why didn't they continue the strategy that worked for 60+ years?
MP Divakar
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