Sharp Corp explores ways on LCD biz revival, Taiwanese firm offers bid for it
Taiwan's Hon Hai Precision Industry Co has offered bid to acquire the LCD business of Sharp Corporation. However, the bidding details were not revealed. Without confirming on its plans to offload LCD business or received any bid offer, Sharp Corp continues to explore several options for reviving the trouble-prone liquid panel display business. Sharp has also asked Apple Inc for funding support. Sharp Corp has sought a $1.9-billion revival package from the banks and decided to slash 5,000 jobs as part of the cost-cutting measures. The intense competition in LCD screens for smartphones from Asian companies is taking a toll on Sharp Corp's business.
Sharp Corp is suffering from heavy pricing war from Asian companies. It's in the process of trimming headcount by 10 percent. Headquartered in Osaka, Japan, Sharp Corp has been assuring its investors that there wouldn't be any spin-off of LCD business.
But, in last July, Sharp Corp's Chief Executive Officer Kozo Takahashi said the company's losses swelled to yen 28.8bn ($240.42mn) for the quarter of April-June. This puts the company in a situation that badly needs some measures.
After Takahashi confirming that he was exploring some options to put the ailing LCD business back on the track, there's been speculation that Sharp might forge an alliance with Hon Hai. This is in addition to accessing cash support from state-backed Innovation Network Corporation of Japan and other companies.
Innovation Network Corporation of Japan is a major shareholder in Japan Display, which is a rival company to Sharp. To support its revival plan for LCD business, Sharp is also considering another option of funding support from its customer Apple Inc. Sharp supplies favored screens to Apple.
The first quarter ending June 2015, Sharp Corp's net sales were flat (-0.2%) at Yen 618.3bn as against the Yen619.7bn in the previous corresponding quarter. The net income was down 5.5 percent to yen33.9bn while operating income eased 4.7 percent to yen28.7bn.
Key factors such as the change of the business model in the European TV segment, offloading the Sharp's US subsidiary solar power generation developer had impacted Sharp Corp in a negative way. The cut-throat competition in the LCD screens for smartphones in the Asian market also impacted the company's performance.
Earlier in 2012 also, Sharp Corp held talks with Hon Hai, also known as Foxconn by its trade name, but couldn't succeed. Since then, both the companies have been in close association and jointly running the LCD panel manufacturing plant in Osaka.