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Business

Sharp to have co-CEOs following Hon Hai-led turnaround

Sharp makes TSE first tier comeback, expects to return to profit this year

Sharp President Tai Jeng-wu rings the bell during a ceremony at the Tokyo Stock Exchange on Dec. 7. (Photo by Kosaku Mimura)

TOKYO -- Japanese electronics maker Sharp will have co-CEOs following the company's successful return to the Tokyo Stock Exchange's first section on Thursday -- potentially opening the door for a Japanese executive to work alongside current President Tai Jeng-wu.

Tai, who was brought in from Taiwanese parent company Hon Hai Precision Industry, better known as Foxconn, had previously expressed a desire to step down once the company was back in the TSE first section.

But in a news conference on Thursday, he said, "it is my responsibility to see through the three-year business plan," which he unveiled in May, and called for Sharp to boost revenue by more than 50% to 3.25 trillion yen in fiscal 2019, from 2.05 trillion yen in the fiscal year ended in March.

Tai added that, "to nurture the next president, we will consider transitioning to a co-CEO system" and devolving more responsibility to the new executive.

"I want to quit, to be honest. I'm already 67," Tai said. "I'll still be in my 60s in 2020, but I won't be able to continue after that."

A co-CEO won't necessarily be chosen from within, Tai said, stressing that the selection should be made on merit. But he also added that he wants to make a decision soon.

Returning to the first section of the TSE is a major milestone in the turnaround being executed by Foxconn.

Shares began trading 0.5% or 20 yen higher at 3905 yen on Thursday, but ended the morning session 1.15% or 45 yen lower at 3840.

Tai said returning to the first section mattered to him, because it allows the company to recruit high-caliber staff. Sharp saw an exodus of employees as business slumped. "Human resources are critical to the future of the company," he said.

Sharp's return comes 16 months after it was demoted to the second tier for falling into negative equity for the fiscal year through March 2016, having struggled in its core display devices business.

Sharp was the first major Japanese electronics maker to be bought by a company from elsewhere in Asia.

Tai implemented a raft of measures to turn the company around, from cost-cutting and personnel management changes to market expansion. The company expects its bottom line for the current fiscal year to return to profit for the first time in four years.

Sharp is a major producer of liquid crystal displays, even though its major customers, such as Apple, are gradually shifting to organic light-emitting diode technology, which offers stronger color contrast and brighter images.

Tai reiterated his belief that other Japanese LCD producers -- Tokyo-based Japan Display in particular -- should join forces with Sharp and Foxconn in order to compete, and said he would try to persuade Japan Display's top shareholder, the government-backed Innovation Network Corp. of Japan, to come on board.

Tai has shown interest in entering the OLED market, but stressed that the company would proceed cautiously. "We are not interested in taking on Samsung," the world leader in the technology. "We start where we can, and then ramp up gradually."

Investors will be keeping a close eye on whether the momentum can be maintained after a new co-CEO is chosen.

Stocks listed on the first section of the Tokyo Stock Exchange account for over 90% of the market cap of all the stocks listed. First tier stocks are more liquid, meaning investors can trade them more easily than those on the second tier.

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