Sharp doesn't want dynamo boss Tai Jeng-wu to leave just yet
Foxconn transplant calls job complete after company returns to TSE first section
GEN NAKAMURA, Nikkei staff writer
OSAKA -- With Sharp now back on the Tokyo Stock Exchange's big board, the electronics maker's forceful CEO considers his mission complete, raising questions about how the company will carry on his efforts to restore earnings growth.
Tai Jeng-wu, the boss sent in by Taiwanese parent Hon Hai Precision Industry, has said from the outset that he would hand over the reins once Sharp made its return to the first section. Sharp reached that milestone Thursday, and the leader told reporters in Tokyo that he intends to follow through.
The typically no-nonsense chief wore a red baseball cap for the new conference, which opened to the strains of "One Way Ticket," a song he says gave him determination.
But Sharp's board of directors is less than excited to see Tai go, he said, since it would be "unusual" to have a change at the top while the company is still in recovery. And so he seems to have struck a compromise. Sharp will look into a co-CEO model, Tai said -- an arrangement that will let him hand over some control while testing the anointed successor. Candidates are being sought both within and outside the company.
Sharp was demoted to the TSE's second section in August 2016 after an ill-fated investment build-up in its liquid crystal display business left it with negative shareholders' equity. Hon Hai, the Apple device assembler better known as Foxconn, acquired most of Sharp soon after, sending in Tai, second-in-command to Foxconn chief Terry Gou, to mastermind a recovery.
Having an outsider in charge initially alarmed many at Sharp. But any apprehension appears to have given way to a reluctance to see him go. "We'll be in a tough spot if Tai-san leaves us," one senior executive said.
Tai, who turned 65 the month after he took over at Sharp, has always seen the job as a sprint, not a marathon.
The CEO's first prescription was a round of intensive cost-cutting designed to change Sharp's free-spending ways, which Tai had likened to those of a spoiled "rich kid" before taking charge. He lowered the threshold for budget items that required the president's approval to 3 million yen ($26,000) or more from several hundred million yen. Some in the company wondered whether Tai would have the final say on items as small as getting the restrooms repaired.
The next step was to set the stage for a return to growth. In February, Sharp took a majority stake in Skytec UMC, the very company to which it had sold its European television operations in 2014, re-entering the European market. Tai also renegotiated deals and contracts that put Sharp at a disadvantage, adamant that no red ink would be tolerated on his watch. In the six months ended in March 2017, Sharp swung to a net profit of more than 20 billion yen after losing more than 250 billion yen in all of the preceding fiscal year. The company's share price effectively quadrupled over the course of a year.
Thanks to Foxconn's assistance, Sharp's top line is also moving in the right direction again. Group sales grew 21% on the year in the six months ended this September, reaching 1.11 trillion yen.
Far from complete
Tai is clearly proud of his work. "I came to Japan with a one-way ticket, determined that I would return Sharp to the TSE's first section," he said Thursday, sitting alongside other executives in caps emblazoned with the logo for Sharp's ultrahigh-definition "8K" televisions. "We've finally reached our goal," he said. His ability to pull off Thursday's rare display of showmanship is a testament to the force of his leadership.
"It's been all me so far," the Japanese-speaking Tai remarked, saying he wanted to work with a co-CEO going forward -- or, according to a source familiar with the matter, multiple ones.
But the need for strong leadership at Sharp is only growing. While Sharp has begun working with Foxconn in new growth fields such as 8K TVs and the so-called internet of things, those efforts have yet to reach scale. Even as rival TV makers Samsung Electronics and Sony pivot to organic light-emitting diode screens, Sharp is making the potentially risky bet of sticking with LCDs, given lingering the difficulty of producing higher resolutions with the newer technology. It is gearing up for mass production, with plans to start up a factory in China's Guangdong Province for large LCD panels in 2019.
Sharp and Foxconn also look to advance cooperation on procurement and logistics. But ensuring that such arrangements do not put Sharp at a disadvantage has been Tai's job so far. If handing off responsibility does not go smoothly, some at Sharp fear the company could return to its old ways, putting it at risk for another crisis.
Sharp's first day back on the first section was not an auspicious one. Shares drifted down 2% by closing time, even as the Nikkei Stock Average climbed 1.45%. Perhaps investors have a sense of how tough assembling new management will be when the charismatic Tai finally takes his return ticket.