Sharp starts a key phase of its revitalization effort

TOKYO -- Sharp has entered a crucial stage of its rehabilitation as the company attempts 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.

The firm also plans to strengthen its financial structure by selling assets. It is possible, however, that banks supporting Sharp's rehabilitation will insist on further restructuring measures.

The operating rate of Sharp's plant in Sakai, Japan, which manufactures LCD panels, was about 30 percent before the establishment of a joint management structure 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 $510 million 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 smartphone 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 Japan's Mie Prefecture was converted into a production base for smartphones 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 hopes 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 showed that Sharp's operating profit was about $478 million in the red.

By Teruaki Yamamoto The Yomiuri Shimbun (MCT)

By Teruaki Yamamoto
The Yomiuri Shimbun (MCT)