Fuse causing the job cut is the company`s profit-plummeting liquid-crystal display (LCD) business, which accounts for 40% of the company`s over NT$100 billion (US$3.12 billion) revenue. Industry watchers pointed out that the company`s LCD orders had been lured by rising underselling suppliers like Innolux Display Corp., a subsidiary of the Hon Hai Precision Industry Co., Ltd.
While seeing overhead cost surging to 6.5% last quarter from first quarter`s 5.8%, the company failed to increase sales last quarter. The company began overhauling operating strategy in July this year and started put a "corporate-streamline" program into action this month in consideration of unlikelihood for its revenue to sharply grow in short term.
The program aims to cut cost by 20% through abandoning money-losing product lines, systematic attritions, and internal job shifts. The streamline program will limit to only Lite-On, leaving its affiliates untouched.
Lite-On`s president, S.H. Lin, pointed out that the company remained healthy and its productivity continued growing. But, it had to do some adjustment in conjunction with the company`s computerization of operation and part out-migration to mainland China. He stressed that manpower streamline happens everyday at big companies throughout the world and for his company the work should be carried out when operation is healthy.
Industry watchers pointed out that Lite-On should do more than simply cut job to improve its finance. They believed that LCD business should be mainly blamed for the company`s declined-profit operation since it had not left the wan-profit business.