Sharp warns it may collapse; few surprised
The Japanese LCD panel maker said it will use its IGZO technology to draw new business
IDG News Service - Japan's Sharp, a major supplier of LCD displays to Apple and other manufacturers, has warned that it may not survive if it can't turn around its business, an admission that caught few off guard.
The Osaka-based manufacture said there is "material doubt" about its ability to continue operating in its earnings report filed Thursday. Sharp added, however, that it still believes it can cut costs and secure enough credit to survive. Its IGZO technology for mobile displays is likely to be a key element of its business strategy.
Companies with credit trouble must warn about possible concerns over their survival as part of their disclosure requirements.
"A year ago people would have been pretty surprised, but Sharp's situation is pretty well-known these days," said Keita Wakabayashi, an analyst at Mito Securities.
Sharp is in the midst of a restructuring plan in which it has reduced headcount, slashed employee salaries and mortgaged its buildings and factories.
The company now targets a net loss of AY=450 billion (US$5.6 billion) for the year, up from the AY=250 billion it forecast previously, due mainly to the restructuring. The company, whose stock has been downgraded to junk status by ratings agencies, continues to seek investments from outside companies, with media reports in Japan linking it to companies including Apple and Intel.
"We are continuing our negotiations with Hon Hai," said Sharp President Takashi Okuda, who spoke to reporters after the company's earnings release on Thursday.
Sharp and the Foxconn parent agreed to a deal earlier this year that would have involved a major investment in Sharp in exchange for an allotment of its shares, but negotiations have dragged on as its stock price plunged in recent months. Sharp's position in negotiations weakens along with its financials, a situation that could lead potential partners to drag out talks.
Sharp, which is suffering from an over-aggressive bet on LCD panels for large-screen TVs, is rushing to switch over to the booming market for tablets and smartphones.
The company's turnaround plan includes a focus on its IGZO technology, which uses far less battery power than existing screens. Named after the indium gallium zinc oxide semiconductor on which it is based, the screens will be used in several upcoming Sharp devices, and the company has said it expects them to become a core product.
"It's important that they keep focusing on small and medium-sized LCD screens to survive," said Wakabayashi.
Sharp said it believes it can still pull itself back to profitability with its current round of restructuring.
"We believe these measures will be enough, as do our banks," said Sharp spokeswoman Miyuki Nakayama.
- Silicon Valley's 19 Coolest Places to Work
- Is Windows 8 Development Worth the Trouble?
- 8 Books Every IT Leader Should Read This Year
- 10 Hot Hadoop Startups to Watch
- Slideshow: 7 security mistakes people make with their mobile device
- iOS vs. Android: Which is more secure?
- 11 sure signs you've been hacked
- Infographic: Converged Infrastructure Benefits This Infographic quantifies the savings organizations are realizing from increased deployment speed, higher availability, and lower annual costs.
- CIOs Deliver Productivity Breakthroughs with Intelligent Digital Signage Retailers have long recognized the influence that digital signage provides over a shopper's point-of-purchase decision making process.
- Going Paperless? Here's What You Need to Think About As makers of some of the world's most popular PDF solutions, we often consult with businesses & governmental agencies that have the goal...
- The Big Data Opportunity for HR and Finance If CEOs, CFOs, CIOs, and CHROs want to drive their businesses forward, they will need to quickly recognize the enormous value of big...
- Top 4 Digital Signage Fails Join RMG Networks for a look at four of the most common reasons digital signage fails in corporate businesses. Learn about strategies to...
- Building Tomorrow's Infrastructure Listen to this podcast to discover how Crider Foods worked with PC Connection to update their IT infrastructure, while maintaining compliance and control. All Computer Peripherals White Papers | Webcasts
Our new weekly Consumerization of IT newsletter covers a wide range of trends including BYOD, smartphones, tablets, MDM, cloud, social and what it all means for IT. Subscribe now and stay up to date!