Japanese electronics giant Sharp has announced today (May 14th) it agreed a 200 billion yen (£1 billion) bailout from banks, after reporting a deeper-than-expected net loss for the year to March of 222 billion Japanese yen.
Mizuho Bank and the Bank of Tokyo-Mitsubishi UFJ will provide 100 billion yen of investment each, while Japan Industrial Solutions will invest 25 billion yen to help fund its "business growth strategy".
The firm also said it would cut about 10 per cent of its global workforce – around 5,000 jobs – including 3,500 jobs in Japan. Sharp will also reduce its capital to 500 million yen in a bid to cancel out accumulated losses.
"We are aiming for a fresh start, one that will lead to a recovery," Chief Executive Kozo Takahashi told a news conference.
"Victim of globalisation"
The company said it suffered "large deficits for the year" mainly due to a "lack of foresight in market changes" and a deterioration of its LCD TV business in the US. It also faces strong competition in its smartphone display business.
Frost & Sullivan's head of technology research in Japan, Marc Einstein, said Sharp had been "very much a victim of globalisation". "All its core businesses in the consumer electronics division – like mobile phones and televisions – have really gone to China, Taiwan and South Korea," he told the BBC.
However, he said the firm was "just one of those big Japanese institutions that's too big to fail – like General Motors in the United States. And that's why the two big banks are investing in it."
Sharp reported a larger-than-expected loss of $1.9 billion for its last financial year ending 31 March. Earlier this week, the firm's shares fell 25 per cent after it said it was considering "various possibilities" for reorganising. The bailout is Sharp's second one in three years.
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