Takashi Okuda, 58, a company veteran of over 30 years, immediately pledged to revamp the company after he takes the helm on April 1. He will replace Mikio Katayama, who becomes chairman.

"I will take responsibility for that turnaround in tandem with the new president," Katayama told a news conference.

"It was not the case that we were moving in the wrong direction. New methods will become necessary and I want to endeavor to improve the company with the new president."

Shares of Japan's biggest maker of liquid crystal displays, which have tumbled since last month when it forecast a 290 billion yen ($3.5 billion) net loss for the year ending March 31, rallied on news the company was about to announce a management reshuffle. Okuda was named after the market closed.

Sharp closed up more than 4 percent, but hopes a management shuffle would lead to a turnaround in the company's fortunes were met with some skepticism.

"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 Sony Corp and Panasonic 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.

LCD PANEL GLUT

Okuda, who joined Sharp in 1978 and rose through the ranks to become head of the company's global business group, will have his work cut out for him.

He said he will reveal his plans to revive Sharp's fortunes before the company announces earnings for the full-year to the end of March. Those announcements normally come at the end of April.

Sharp has been hammered by a global glut of LCD panels and its export competitiveness was hampered by a record rally in the yen against the dollar.

That meant it struggled to sell products from its two main LCD plants in Japan that it does not use for its own TV production.

That forced Sharp to write off 33 billion yen of inventory in the October-December quarter. A slump in its own TV sales caused LCD panel inventories to balloon further.

Meanwhile, billions of dollars spent building its state-of-the-art facilities in Kameyama and Sakai in western Japan have left Sharp indebted. At the end of December, Sharp's net debt-to-equity ratio was 1.03, six times the industry average and the highest among Japan's electronics firms, Thomson Reuters data shows.

Losses last quarter erased about 180 billion yen in equity, prompting ratings agency Fitch to downgrade the outlook on its BBB- rating to negative, raising the possibility of a future cut to speculative grade.

"No-one is buying the stock on the company's future hopes," said Fujio Ando, senior managing director of Chibagin Asset Management, referring to the late rally in the shares on Wednesday.

"The company invested enormously in domestic factories when they really should have been focusing on expanding its production abroad," he said.

Indeed, earlier on Wednesday, Sharp shares hit 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.

($1 = 82.67 yen)

(Additional reporting by Dominic Lau, Mayumi Negishi and Mari Saito; Writing by Chris Gallagher; Editing by Neil Fullick)

• A Permanent Economic Emergency