Olympus to Cut 2,500 Jobs, Sell Equity Stake: Report
Japan’s Olympus Corp, hit by a US$1.7-billion fraud scandal, plans to shed 2,500 workers and sell an equity stake to either Sony Corp or Panasonic Corp in a bid to bolster its finances, local media reported Wednesday.
Olympus, the world’s leading maker of diagnostic endoscopes, is struggling to recover from an accounting fraud uncovered last year by its then CEO, Michael Woodford. It was forced to correct years of accounts, leaving its balance sheet badly weakened.
The job losses, equal to about 7 per cent of its total workforce, will come mainly from Olympus’s loss-making camera business and by consolidating its overseas plants, the Nikkei business daily said. They would be revealed on June 8, it added.
Sony and Panasonic are the leading contenders to pump fresh equity in Olympus, the Asahi newspaper said, adding that the successful suitor would invest several hundreds of millions of dollars for a stake of more than 10 per cent.
That decision is expected by end-June, the Asahi said.
Olympus shares jumped 4 per cent to JPY1,214 on the news, although the stock is still down nearly half since Woodford blew the whistle last October.
Investors in Sony and Panasonic, both struggling to turn their own businesses around after reporting record losses, gave the newspaper reports a cold reception on Wednesday. Sony shares fell 1.9 per cent and Panasonic lost 2.2 per cent in a wider Tokyo market which dipped only 0.3 per cent.
Panasonic is considering plans to shed as much as half its 7,000-strong workforce at its headquarters, after 17,000 job cuts in the year ended March 31. Sony has said it is cutting 10,000 people from its payroll.
Both companies have been hobbled by losses in their TV businesses but there has been speculation that they, along with other global electronics firms, are interested in expanding into the healthcare industry, which offers more stable revenues.
Olympus’s endoscope business has continued to be a reliable earner throughout the scandal and its tumultuous aftermath.
Japan, unaccustomed to mass US-style layoffs, is awash with news of job losses as big companies look to cut costs amid weak demand and a strong, profit-sapping yen.
Last weekend, a source revealed that struggling chip-maker Renesas Electronics Corp, the world’s largest maker of microcontroller chips, would axe 12,000 jobs.
On Tuesday, Woodford won a likely multi-million dollar settlement from Olympus over his claim of unfair dismissal.