Remember: Sharp Manufactures Onkyo, Integra, Pioneer & Elite
Sharp Corporation, part of top Apple supplier Foxconn, saw its annual shareholders meeting turn contentious this year as investors are frustrated with management after the company has turned in two years of significant net losses. Perhaps to help mollify investors, the company announced its President and CEO, Robert Wu, has stepped down from his role at the company. Sharp also announced it is scaling back its struggling LCD business.
See more on troubles at Sharp
Two recent announcements from Sharp show a company clearly struggling as it dramatically scales back a division that was once its claim to fame – LCD panel manufacturing. I recently told you how the company is negotiating with two different companies that are interested in turning what was once its state-of-the-art LCD panel manufacturing facility into a data center to build up the country’s AI infrastructure.
Why do I follow this company so closely? Remember, Sharp is the manufacturing company partnered with Voxx International to manufacture Onkyo, Integra, Pioneer, and Pioneer Elite products. I’ve seen nothing in the recent announcements specifically related to its audio business, which is built in the company’s factory in Malaysia. But with the overall company struggling as much as Sharp is now, likely every division is at risk.
A Portion of Onkyo/Integra/Pioneer Losses are Passed on to Sharp by Voxx Int’l
Also, Voxx has been passing on a share of the losses of its Premium Audio Company to Sharp, adding to its overall losses.
The first announcement from Sharp came out a couple of weeks ago, saying it was cutting jobs at the Sakai LCD plant by 50%. It is hoping to accomplish this by offering employees voluntary early retirement for at least 500 employees…about half of the workforce. The other half will be reassigned and shipped off to other Sharp facilities. The company has decided to close the plant completely and either KDDI or SoftBank (or both) will take over the plant to build AI infrastructure.
Sharp CEO is Forced Out After Two Years of Heavy Losses
Then, in new news this week, we learned that Sharp CEO Robert Wu has stepped down as President and CEO…probably forced out by parent company Foxconn which is losing patience with the money-losing brand. According to the Nikkei, there are “visible [signs of] friction…with Taiwanese parent Foxconn.”
The company said that Executive Vice President Masahiro Okitsu will replace Wu immediately following the company’s annual shareholders meeting. That shareholders meeting, by the way, was reported by several news outlets as becoming quite contentious.
An Investor Tells Sharp CEO to His Face That He is ‘Unqualified’
One investor stood up and directly addressed Wu, “You’re unqualified to be a managerial leader,” he said.
Another asked a question of the managers at the meeting, “Did the inability to decide to scale down the LCD business stem from clinging on to the company’s past glory?”
Ouch…investors are clearly angry.
Financial Analysts Criticize the CEO As Well
So are financial analysts, apparently. “The speed of decision-making was slow,” said Yu Okazaki, a research analyst at Nomura Securities, according to the Nikkei.
Yasuo Nakane, senior analyst at Mizuho Securities added, “Wu must have had little experience in management.”
Foxconn acquired Sharp back in 2016. At that time, the new parent company installed Tai Jeng-wu as Sharp’s head manager, who was given the mission to get the money-losing company back on track.
Foxconn-Connected Exec Gets Sharp in Shape in 2018
Thanks to aggressive cost-cutting, including reducing the amount of executive management, and ongoing close monitoring of expenses, by 2018 Sharp was profitable again. Tai vowed not to take a paycheck until the company was profitable again and he was said to be brutal about keeping costs under control. Any expense over $18,700 had to be directly approved by the CEO.
Tai was able to lower non-production expenses by ¥100 billion per year. With this, Sharp was once again profitable in 2018 – its first profitable year in four consecutive years.
According to Nakane, the Mizuho Securities analyst, “TAI reassessed investment and payment amounts with a sense of urgency. He was close to [Foxconn] founder Terry Gou, and he took action while keeping the balance between Sharp and Foxconn in mind.”
In Transition to Wu, Sharp Lost Money in His First Year in Charge
Wu took over as CEO in 2022, a year that ended with the company booking a ¥260.8 billion (more than $1.7 billion) net loss. The loss was mostly attributed to its liquid crystal display business which just kept hemorrhaging red ink. At a Foxconn shareholders meeting in May, Foxconn Chairman and CEO Young Liu announced that new directors and management teams would be formed at Sharp.
But the losses at Sharp are not the only issue between its management and the top executives of its parent company. In my article last month about Sharp offering to sell off half of its Sakai LCD panel manufacturing facility, there was a strange and confusing development where first the company had an agreement with one buyer, and then all of a sudden, there was another buyer who claimed it had a deal for the same space.
Lack of Communication Embarrasses Both Sharp and Parent Foxconn
First Sharp announced it had a deal with KDDI, a major Japanese telecom player, to turn the facility into an AI data center. Then, a few days later, it announced it had a deal with SoftBank, a rival telecom company to KDDI for the same plant.
It turns out that this resulted from a breakdown in communication between Sharp and Foxconn…and Foxconn is none too happy about it. Apparently both Sharp and Foxconn were engaged in selling the same building, and neither were coordinating their efforts with the other. In part, this forced the decision to sell off the whole plant – laying off and/or transferring the 1,000 or so employees.
Foxconn to Reassert Its Direct Control of Sharp
Some news reports cite the lack of communication or coordination in this matter as the primary reason Foxconn called for the dismissal of Wu from Sharp.
In the meantime, the company has announced that Foxconn’s chairman Liu will become chairman of Sharp as well. Former CEO Wu will become deputy chairman.
Liu has said that Foxconn “will take a more active role at Sharp.”
Learn more about Sharp by visiting global.sharp.
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