Still Struggling, Sharp Fears for Future
Still Struggling, Sharp Fears for Future by UCStrategies Staff
The Japanese TV manufacturer Sharp Corp has announced that it may no longer be able to survive independently due to its annual net loss of $5.6 billion. In a bid to keep the boat afloat, Sharp is considering teaming up with other companies.
The company has experienced major second-quarter losses; this is combined with severe cash flow issues. "This raises serious doubts about (our ability) to continue as a going concern," the company announced, adding that it was making moves to generate cash flow through asset sales, pay cuts and voluntary redundancies.
Sharp’s financial problems are exacerbated by the fact that most of its Japan-based manufacturing plants and offices are mortgaged. Company representatives said that it was seeking other companies who may be willing to help out.
Sharp's shares have taken a dive of more than 75 percent since January 2012. In October they dropped a further two percent, just ahead of the company’s announcement.
The floundering company is continuing to attempt to secure loans from several Japanese banks while cutting as many as 10,000 jobs. Despite the company’s hardship it is forecast to keep its head above water for the remainder of 2012.
Earlier this year, Taiwanese manufacturer Hon Hai announced that it intends to purchase a 9.9 percent stake in Sharp, in spite of the business’s massive predicted losses. Hon Hai added that it was seeking a long-term involvement.
At the same time that Hon Hai made its investment pledge, Sharp announced that it may quit the consumer enterprise completely, despite being a main contender in the sector for more than a century.
As well as Sharp, Japanese electronics and display manufacturers Sony and Panasonic have also reported financial troubles, though not as devastating as Sharp. However, Sony and Panasonic announced they will produce 10 million fewer TV sets between them in 2012, taking a combined loss of almost $21 million.
As well as facing weakened demand and strong competition from Samsung Electronics and Apple Inc., the Japanese brands are also dealing with a strong yen and fluctuating sales in China, where Japanese goods have been boycotted due to disputes over island ownership in East China.
"Consumer needs have been changing and for too long Japanese electronics firms, like Sharp, with their size and heavy reliance on past successes, have been too slow to adapt," said Yuuki Sakurai, CEO of Fukoku Capital Management. (CU) Link