Home > News
  print button email button

Sunday, Sep. 16, 2012

Crisis-hit Sharp turns 100 without a future to look forward to


By MIE SAKAMOTO
Kyodo

Sharp Corp. marked the 100th anniversary of its establishment on Saturday, but the celebratory mood is likely to be dampened by the electronics maker's unprecedented financial crisis.

Saddled with its worst net loss of ¥376 billion for the business year ended in March, the maker of Aquos TVs has been taking heavy restructuring measures amid stalled capital tieup talks with Taiwanese business partner Hon Hai Precision Industry Co.

Reflecting investor concern about bankruptcy fears, Sharp's share price has plunged about 67 percent since March to around ¥200, after briefly hitting ¥164 in August as concerns mount about the viability of its mainstay liquid crystal display panel business.

On Friday, President Takashi Okuda delivered a speech to employees pledging to follow through on the restructuring measures, which include layoffs and asset sales, to return to profitability in the year starting next April, officials said.

"Overcoming the difficulties as a whole is the priority, and I would like to make all of us pledge our determination to transform our company into a new Sharp," Okuda was quoted as telling some 30,000 employees in Japan.

After starting as a metalworking shop, the firm became a corporate entity known as Hayakawa Metal Works Institute Co. in 1924. It was the first Japanese company to succeed in mass production of televisions in 1953.

It renamed itself Sharp in 1970 after the Ever-Ready Sharp Pencil, a mechanical pencil invented by founder Tokuji Hayakawa. Packing a scissors and compass, the multifunctional pencil became a hit in Europe and the United States as well as in Japan, helping the company expand.

Sharp began concentrating its resources on LCD displays from the late 1990s under the leadership of Katsuhiko Machida, who is now an adviser.

"We will replace all TVs sold in Japan with LCD ones by 2005," Machida said in 1998, the year he became president. Although his pledge was perceived as unrealistic at the time, according to spokeswoman Miyuki Nakayama, Sharp accelerated the spread of LCD TVs globally.

In 2005, Sharp had a leading 17.6 percent share of the worldwide LCD market and dominated Japan with a 44.3 percent share, according to research firm NPD DisplaySearch.

Boosted by brisk sales of its mobile phones, Sharp reported a record-high net profit of ¥101.92 billion and sales of ¥3.42 trillion in the year ended in March 2008 before its television business came under heavy pressure from its rivals in South Korea.

Sharp's investment in LCD manufacturing plants in Kameyama, Mie Prefecture, and Sakai, Osaka Prefecture, rose to ¥945 billion in the 2000s. But its decision to cling to the sector, enhance the technology and create new LCD products forced it into a corner, according to Mana Nakazora, chief credit analyst at BNP Paribas Securities (Japan) Ltd.

"It is not good to dwell upon past glory," she said, noting that Sharp is not the only domestic electronics maker to suffer from focusing on limited business segments that produce product gluts.

"It is good to have successful experiences, but managers need to draw up blueprints for directions in which to move forward," Nakazora said.

Sharp may need to leave the Aquos brand behind and concentrate on making parts for other companies instead so it can use its technological capabilities to survive the crisis, she said. But what the company has to do now is show that it is here to stay, she added.

"To find out the next step, the management needs to declare it will survive," she said. "It needs to make an announcement about a tieup with Hon Hai, conduct restructuring measures thoroughly and secure solid support from banks. . . . Then it has to hammer out how it will keep operating as the new Sharp."

There are some bright spots involving unique technologies that could shore up Sharp's efforts to mount a recovery.

Sales of products that use Sharp's Plasmacluster air purifying technology reached 40 million units worldwide by the end of June and use of the technology has spread to products ranging from automobile air conditioners to lighting.

It is also seeing stronger-than-expected demand for the Cocorobo, a pricey ¥130,000 vacuum cleaning robot released in early June that can recognize and respond to simple voice commands and questions.

"Due to favorable sales, the production volume of Cocorobo is considerably exceeding the initial plan of 10,000 units a month," said Sharp's Nakayama.



We welcome your opinions. Click to send a message to the editor.

The Japan Times

Article 7 of 15 in National news

Previous Next



Back to Top

About us |  Work for us |  Contact us |  Privacy policy |  Link policy |  Registration FAQ
Advertise in japantimes.co.jp.
This site has been optimized for modern browsers. Please make sure that Javascript is enabled in your browser's preferences.
The Japan Times Ltd. All rights reserved.