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Foxconn to cut Sharp jobs after review of 'subpar' performance
[NEW YORK] Foxconn Technology Group chairman Terry Gou wasted little time addressing his newly acquired employees at Sharp Corp, warning of job cuts while promising to reward workers who put their "heart and soul" into rebuilding one of the world's iconic brands.
After Sharp's results Thursday, in which the Japanese consumer electronics company posted a second straight annual loss, Mr Gou said in a letter to staff: "It is with a heavy heart that I say to you the results were subpar."
A "close review of the company's operations" highlighted a "level of inefficiency throughout Sharp," and therefore a "very regrettable need" to reduce the workforce, he wrote.
The net loss at Osaka-based Sharp widened to 256 billion yen (S$3.23 billion) in the year ended in March from a loss of 222.3 billion yen a year earlier. That compares with the 161 billion yen loss expected by analysts.
Sharp's struggle with deteriorating demand for its consumer electronics and displays has resulted in more than US$12 billion in net losses over the past five years and raised doubts about its ability to survive as a going concern.
Mr Gou, who has built a fortune assembling devices for others including Apple Inc, spent four years chasing the Japanese company before winning control with a US$3.5 billion deal in March. He is now facing the task of reviving a company that makes products ranging from household appliances and solar panels to office equipment.
"My hope is all the necessary reviews and procedures will be completed swiftly and without issue so we can all get down to the important job of turning this great company around and helping it return to a global leadership position," Mr Gou wrote in the letter obtained by Bloomberg.
Once the workforce is trimmed, the company will put in place a "performance-based appraisal system designed to reward every Sharp employee who is truly committed to his/her work, putting heart and soul into everything he/she does," according to the letter.
Wage cuts and reductions in year-end bonuses are "a thing of the past." In addition, Sharp will implement a stock-option plan involving preferred stock that will be reacquired from Japan Industrial Solutions Ltd. Mr Gou personally guaranteed the credit on the JIS stock buybacks.
As part of the turnaround, Sharp will look to reduce costs while injecting new capital into the company. Sharp will invest in and "actively develop" new technologies in areas including communication, the Internet of Things, display, Smart Home, solar energy and business solutions, Mr Gou said.