Sharp Corp on Wednesday named Takashi Okuda as its new president as the electronics company heads for a record annual net loss, the latest Japanese firm to shake up management after tumbling into the red on slumping TV sales.
Okuda, head of the firm's global operations, will replace Mikio Katayama, who will become chairman, the Osaka-based company said in a statement. In Japan, company presidents traditionally take on the chairman's role when they step down.
Shares of Japan's biggest maker of liquid crystal displays, which have tumbled since Sharp last month forecast a 290 billion yen net loss for the year ending March 31, rallied on news of a management reshuffle. However, Sharp announced the details after the close of trading.
Sharp closed up more than 4 percent, but the rally may have been premature.
"Just because you switch presidents doesn't change any of the fundamental problems," Yoshihiko Tabei, general manager and chief analyst at Kazaka Securities, said.
"At least with Sony the new head is someone that is known, that has run its successful PlayStation business."
Japanese peers Panasonic Corp and Sony Corp have also announced management changes. The three companies expect to post a combined loss of $17 billion this year, battered by tough competition from foreign rivals led by Samsung Electronics Co Ltd, weak demand and a strong yen.
Canon Inc said in January it would replace its president after the camera-and-printer maker forecast weak earnings growth.
Earlier on Wednesday, Sharp shares slid to their lowest level since the 1980s on concerns over the company's outlook and market speculation it would need equity financing to shore up its balance sheet.
"We've definitely got fast money guys shorting this, as they've probably been doing for weeks, mostly around the story of their balance sheet being less than solid," a senior dealer at a foreign bank said.
"I also hear a lot of speculation that they may do a deal. That's mostly from convertible (bond) guys... basically Sharp is not in a great spot in terms of their underlying business," the dealer said.
Underscoring the company's difficulties in reining in costs, Japanese media reported that Sharp would ask workers to take a temporary freeze on pay increases.
After rallying 4.3 percent to 531 yen by the close on Wednesday, Sharp shares are down 15 percent since February 1, the day it forecast the annual loss. That compares with a 14 percent rise in the benchmark Nikkei average.
Copyright Thomson Reuters 2012