Sharp struggles to survive as it posts the net loss forecast of $5.6bn

Sharp Corp.

Sharp Corp.

On the 1st of November, Sharp Corp. posted its revised forecast of record losses of approximately $5.6 billion. The revised full-year net loss forecast shows that Japan’s electronics maker is struggling. The company admitted that it would not be able to survive on its own; therefore it was considering cooperation with other companies.

Record net loss ahead of Sharp Corp.

In a statement released by Sharp Corp., the company said that it might not carry on. The company noted: “Our corporate group has booked massive second-quarter net and operating losses … and now see a serious negative operating cash flow. This raises serious doubts about [our ability] to continue as a going concern.”

The Japan’s electronics maker revised its forecast net loss for the fiscal year to approximately $5.6 billion after taking around $1 billion restructuring charge in three months ended September. Sharp Corp. cut also its sales forecast to approximately 2.46 trillion yen from the previous estimate of 2.50 trillion yen.

Sharp Corp., which is the leading producer of liquid crystal displays in Japan, secured fresh loans from bank as it promised to downsize the workforce, sell its assets including overseas TV assembly plants and return to profit as well. In addition, the Japan’s electronics maker mortgaged the majority of its offices and factories located in Japan, also the factory which produces displays for Apple Inc.’s devices such as iPhone and iPad.

Certainly Sharp Corp. is struggling with the same problems as its Japan’s competitors, Sony Corp. and Panasonic Corp. TV market, which once was dominated by Japan’s electronics makers, is currently a battle field where Japanese, South Korean and Taiwanese companies fight against each other.

In addition, Japan’s electronics makers such as Sharp Corp. and Sony Corp., etc. are not able to gain popularity in the global smartphone market as their main rivals Apple Inc. and Samsung Electronics Co. have dominated the field.

The European debt crisis, the slowdown in China and the last year’s quake-tsunami only worsened the company’s situation.  The recent territorial dispute between Japan and China also affected Japan’s electronics makers.

Shares of Sharp Corp. have dropped approximately 78 percent this year, at the same the benchmark Nikkei average has increased as much as 5 percent.

The future of Sharp Corp.

Even though Sharp Corp. is restructuring, analysts believe it may not be enough. Makoto Kikuchi, chief executive officer at Myojo Asset, holds an opinion that there is no future for Sharp Corp. Also Tetsuro Ii, chief executive officer at Commons Asset Management in Tokyo, is convinced that the future will not bring anything good for the Japan’s electronics maker.

Nevertheless, Sharp Corp. is looking for alliances, which would allow the company to survive. The Japan’s electronics maker has been in talks with Taiwanese firm Hon Hai Precision Industry, which is the manufacturer of everything from Apple Inc.’s iPhones to Sony PlayStation. Sharp Corp. hopes that Hon Hai Precision Industry will become the company’s biggest shareholder. Even though the negotiations have been stuck in limbo, the Japan’s electronics maker expects the deal before a March deadline.

Aubrey Chang
Aubrey Chang, Associate Editor Industry Leaders Magazine (www.industryleadersmagazine.com)

Recent Posts

Elon Musk’s Starlink satellite internet set to cover the globe soon

Elon Musk’s Starlink satellite internet set to cover the globe soon

Starlink, the satellite internet unit of Elon Musk’s SpaceX, will most likely be able to provide global coverage by September, according to the company’s president Gwynne S
13 hours ago
At the next Krispy Kreme IPO, the donut maker aims to raise nearly $4 billion

At the next Krispy Kreme IPO, the donut maker aims to raise nearly $4 billion

Krispy Kreme, the popular donut chain, aims raise roughly $4 billion as it makes one of the biggest IPO debuts at the NYSE.
13 hours ago
Panasonic hopes Blue Yonder acquisition will improve its software woes

Panasonic hopes Blue Yonder acquisition will improve its software woes

Most Japanese major companies, which at one time were leaders in consumer electronics, are struggling to find their feet in a world that has moved to digital software. Electronics
1 day ago
Ikea and Rockefeller Foundations to raise $10 billion for renewable energy projects in poor countries

Ikea and Rockefeller Foundations to raise $10 billion for renewable energy projects in poor countries

The Ikea and Rockefeller foundations are jointly launching a $10 billion fund to promote small-scale renewable power projects in developing nations. Both
2 days ago
EC initiates another probe into Google’s adtech practices

EC initiates another probe into Google’s adtech practices

EU antitrust regulators are planning a formal investigation into Google’s digital advertising practices by the end of this year. Google is already facing unprecedented regulatory
3 days ago
Some Microsoft employees stayed at data centers during Pandemic to keep all systems going

Some Microsoft employees stayed at data centers during Pandemic to keep all systems going

The Covid-19 pandemic ravaging the world for more than a year has forced companies and organizations to find viable solutions to keep the business going. Most found a solution in w
3 days ago