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KokSum
It's just very puzzling, how can Sharp allow this to happen during this crucial ...
junko.yoshida
It's still on. But Sharp reportedly has had problems in manufacturing its IGZO ...
Sharp, dulled by losses, running out of options
Junko Yoshida
11/1/2012 1:15 PM EDT
Sharp-Hon Hai deal?
Hon Hai agreed in March to acquire a 9.9 percent stake in Sharp for 550 yen a share, providing the Japanese company with 66.9 billion yen. As the companies renegotiated the deal, Sharp's share price fell to a 38-year low in mid-August to 164 yen. Talks stalled after top executives from both companies met in Osaka at the end of August.
The two companies, to date, have been unable to come up with a reworked deal.
Sharp president Takashi Okuda said the company is still talking with Hon Hai, adding that Sharp is also "considering other alliances," according to Nikkei, Japan’s economic journal.
While Okuda didn't elaborate, media reports have speculated that Sharp approached Apple, Intel, Google, Microsoft and Hewlett-Packard about a possible capital investment in exchange for access to Sharp's LCD technology. None of those reports has been confirmed.
A more likely scenario, according to Japanese industry sources, involves Japan’s Ministry of Economy, Trade and Industry bailling out Sharp as it did in engineering a rescue package for chip maker Renesas.
Ministry officials have expressed growing concern about the loss of indigenous technologies and the possibility that Sharp could be swallowed by Foxconn's parent company.
Quarterly results
In the July-September quarter, Sharp posted a net loss of 249.1 billion yen ($3.11 billion), compared to a net profit of 9.4 billion yen in the same period a year earlier. Revenue fell 4 percent to 645.5 billion yen from the previous year.
Sharp also reported an additional loss of 84.4 billion yen stemming from restructuring costs. It also wrote down its deferred tax assets by 61 billion yen.
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Hon Hai agreed in March to acquire a 9.9 percent stake in Sharp for 550 yen a share, providing the Japanese company with 66.9 billion yen. As the companies renegotiated the deal, Sharp's share price fell to a 38-year low in mid-August to 164 yen. Talks stalled after top executives from both companies met in Osaka at the end of August.
The two companies, to date, have been unable to come up with a reworked deal.
Sharp president Takashi Okuda said the company is still talking with Hon Hai, adding that Sharp is also "considering other alliances," according to Nikkei, Japan’s economic journal.
While Okuda didn't elaborate, media reports have speculated that Sharp approached Apple, Intel, Google, Microsoft and Hewlett-Packard about a possible capital investment in exchange for access to Sharp's LCD technology. None of those reports has been confirmed.
A more likely scenario, according to Japanese industry sources, involves Japan’s Ministry of Economy, Trade and Industry bailling out Sharp as it did in engineering a rescue package for chip maker Renesas.
Ministry officials have expressed growing concern about the loss of indigenous technologies and the possibility that Sharp could be swallowed by Foxconn's parent company.
Quarterly results
In the July-September quarter, Sharp posted a net loss of 249.1 billion yen ($3.11 billion), compared to a net profit of 9.4 billion yen in the same period a year earlier. Revenue fell 4 percent to 645.5 billion yen from the previous year.
Sharp also reported an additional loss of 84.4 billion yen stemming from restructuring costs. It also wrote down its deferred tax assets by 61 billion yen.
Related stories:
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iniewski
11/1/2012 1:30 PM EDT
Revenue drops only 4% but the losses grew to $3B a quarter???
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junko.yoshida
11/1/2012 1:50 PM EDT
It is due to a number of write-offs the company had to make.
In the first half of the current fiscal year alone (April to September, 2012), Sharp said it made a net loss of 387.5 billion yen as a result of rising restructuring costs and falling demand for LCD televisions.
It booked 84.4 billion yen of extraordinary charges as it wrote off the value of surplus display inventory and pulled out of solar panel manufacturing.
It also wrote off 61 billion yen of so-called deferred tax assets – corporate-tax credits it could redeem if it returned to profit. But that's a prospect that doesn't look good for now.
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iniewski
11/1/2012 1:56 PM EDT
thank you Junko, that makes sense, it was not an operational loss...still their prospects look bleak
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SylvieBarak
11/1/2012 3:37 PM EDT
Maybe the firm needs to just focus in on just a few of its more profitable business units and sell of the rest. That way it could stay independent, and run leaner and meaner. Easy to say, tough to do, I know... but it's not like the company doesn't have a choice.
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iniewski
11/1/2012 3:51 PM EDT
I agree Sylvie... but it is hard to do in Japan, much easier would be in US
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junko.yoshida
11/1/2012 6:12 PM EDT
If Sharp gets rid of its LCD operation, there is really nothing left.
It's got solar, but that's tanking -- everywhere in the world.
Presumably, Sharp could focus on small-screen LCDs for mobile. But then, again, that's a very competitive market.
The fact that it makes harder for a Japanese company to make a huge change, as discussed in the thread here, is the following. Japanese companies, in general, are not in the habit of ruthlessly cutting employees at the first sign of decline in any given quarter.
They won't act fast.
But to their credit, Japanese companies are much more paternalistic. They see themselves socially responsible for taking care of their employees.
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iniewski
11/1/2012 6:15 PM EDT
Being socially responsible is actually making lots of sense for me...we tend to dump engineers in North America at every sign of biz weakness...good for companies, perhaps, not so good for the society at large...kris
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junko.yoshida
11/1/2012 6:29 PM EDT
I agree, Kris.
I feel ambivalent every time when I report on quarterly results.
But those are the early warning signs no companies should take it lightly, and they should come up with a strategy -- quickly.
If Sharp runs themselves into ground, then, there will be no Sharp and no place to work!
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Mike Santarini
11/2/2012 1:56 PM EDT
Nice headline
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KokSum
11/12/2012 2:53 AM EST
I wonder what happened to the Sharp's deal of LCDs for iPhone?
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junko.yoshida
11/13/2012 1:17 PM EST
It's still on. But Sharp reportedly has had problems in manufacturing its IGZO panels, which led to a substantial delay in delivery. Plesae read the story here:
http://www.eetimes.com/electronics-news/4400477/Embattled-Sony--Sharp-and-Panasonic-left-with-little-credibility?pageNumber=0
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KokSum
11/15/2012 12:32 AM EST
It's just very puzzling, how can Sharp allow this to happen during this crucial time since the survival of this company is at stake..(??)
What do you think of Japan Display?
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