Sharp In Serious Trouble, OZ Companies Future Now In Doubt As CEO Speaks Out

There is even doubt whether Sharp will survive another 12
months after Sharp Chief Executive Kozo Takahashi said overnight that Sharp is
facing “very severe conditions” after reporting another year of losses.

The company said at an analyst briefing that they intend to
focus on Japan and Asia, scaling back its presence elsewhere including
Australia.

Sharp said it would cut at least 3,500 more employees
through a voluntary retirement program, and that they intend to further shuffle
its management team.

Mr. Takahashi said he had no intention of stepping down.

Sharp has already sold off its European TV business. The
company also said it would try to expand sales of smartphone camera modules,
but that is a business in which rivals, including Sony, are strong.

This week Sharp was given a $2.4 Billion dollar lifeline
however analysts a sceptical. “It’s not a question of whether they will be able
to stay alive for another year,” said Amir Anvarzadeh, head of Japan equity
sales at brokerage BGC Partners. “At Panasonic and Sony, the restructuring was
about keeping the good stuff. At Sharp, where’s the good stuff?”

The company, which makes everything from televisions to
solar panels to display panels for Apple iPhones, is piling up the debt. Two
Japanese banks alone have outstanding loans of $6.5B with no clear picture of
how this money will be repaid.

To get the latest financial top up Sharp pledged a range of
restructuring measures, from job cuts to accounting manoeuvres to the possible
sale of its headquarters in Osaka.

Analysts said the steps outlined last night did little to
address Sharp’s fundamental problem-a lack of promising businesses around which
to rebuild. Unlike Japanese rivals such as Sony and Panasonic who is moving
away from the consumer electronics business and has sold off money-losing
businesses to focus on profitable niches, Sharp has few prospects for
generating money to repay the loans.

The Wall Street Journal said that Sharp’s liquid-crystal-display
business, focusing on panels for smartphones and tablet computers, has good
technology, including the use of indium gallium zinc oxide semiconducting
material. But analysts say Sharp’s commitment to the proprietary technology may
actually hamper its ability to sell displays to smartphone makers, because
companies such as Apple prefer to source similar parts from multiple suppliers.

Prices of LCD panels are also falling as competition heats
up and low-cost Chinese smartphone makers carve out a growing market share.

Some analysts say Sharp ought to sell or spin off the
smartphone panel business. Previously it formed a joint venture with Hon Hai
Precision Industry Co., the Taiwan-headquartered electronics manufacturer that
operates under the name Foxconn, for making large LCD panels.

But Sharp Chief Executive Kozo Takahashi said Thursday that
the company had no intention of reducing Sharp’s ownership of the smartphone
display business below 100%.