The Sharp Corporation has been in business for over a hundred years, and has been a major player in the home entertainment industry for decades. But last Friday stockholders showed their displeasure with the company’s recent strategy, resulting in a near 30% drop in share prices.
This came on the heels of the company’s announcement that it might be in line for as much as a $1.28 billion loss this fiscal year. And after declaring they would cut as many as 5,000 jobs from their international payroll, industry experts are predicting the beginning of the end for this once proud company.
Sharp laid off the entire advertising and marketing department at its American headquarters, and those looking for reasons should look no further than their bottom line. Sharp enjoyed a LCD TV/HDTV market share of about 21% just seven years ago. Last year, that number had dropped all the way to under 8%.
A couple of years back, sensing the impending disaster, Sharp put more than $4 billion into a new fabrication facility in Sakai City. They would own more than one third of the business, giving them a huge leg up in manufacture. However, when their money dried up, they ended up having to cut that investment down to under 10% of the company, and looked for another company to bring in additional investment.
Hon Hai Precision, Taiwan’s parent company to Foxconn jumped in. The problem for Sharp was that Hon Hai’s investment ended up costing them only twenty cents on the dollar compared to what Sharp originally paid, and Hon Hai also became the largest investor through the deal.
Even that miserable outcome hasn’t saved Sharp yet, as the investment is still waiting to be made official. Add that to Sharp receiving a debt rating from Moody’s Investors Service of Prime-3, basically the lowest grade an investment can receive, and the writing is clearly on the wall for this once proud industry leader.