Sharp enters crucial stage of rehabilitation
Teruaki Yamamoto / Yomiuri Shimbun Staff Writer
Sharp Corp. has entered a crucial stage of its rehabilitation as the company aims to finalize a tie-up with a Taiwan manufacturer and sell some of its assets.
Sharp plans to revitalize unprofitable divisions such as liquid-crystal display panels and TV sets by forming a capital and business partnership with Hon Hai Precision Industry Co.
The firm also plans to strengthen its financial structure by selling assets. It is possible, however, banks supporting Sharp's rehabilitation will insist on further restructuring measures.
The operating rate of Sharp's Sakai, Osaka Prefecture, plant, which manufactures LCD panels, was about 30 percent before a joint management structure established with Hon Hai. Since July, the rate has improved to about 80 percent.
Hon Hai injected capital into the Sakai plant, which was then excluded from Sharp's consolidated earnings reports. As a result, Sharp was able to separate 40 billion yen of debts from its financial records.
Sharp plans to sell other plants manufacturing TV products in Mexico and China to Hon Hai.
The two firms are also jointly developing smart phone models for the Chinese market. Sharp wants to release the models this autumn, more than six months earlier than initially scheduled.
Sharp's Kameyama plant in Mie Prefecture was converted into a production base for smart phones and panels for tablet computers, demand for which is expected to rise.
Until such display panels are a pillar of Sharp's business, the company aims to stay afloat with profit-making divisions, such as photocopiers, home appliances and light-emitting diodes.
Therefore, Sharp strongly denied news reports and speculation that it may sell such divisions or spin off the Kameyama plant, saying such actions would run counter to its business reconstruction efforts.
Consolidated business results as of March 2012 showed Sharp's operating profit was 37.5 billion yen in the red. The firm aims to improve the figure for the second half of fiscal 2012 and return to profitability.
However, equity partnership negotiations with Hon Hai are predicted to be difficult over settlement of the conditions of the alliance. The deadline for Hon Hai's purchase of Sharp shares has been set for March next year,
Unless Sharp is able to quickly rebuild flagship businesses through the tie-up, it is highly likely the firm will be forced to cut more jobs or sell profit-making divisions.
http://www.yomiuri.co.jp/dy/bu...ss/T120819002354.htm
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