The crisis that affects Sharp and which for now does not seem to have a light at the end of the tunnel, could force the Japanese company to sell two TV assembly plants to Foxconn which it owns in Mexico and China and runs the risk of calling into question the sale of the shares that should pass precisely to Foxconn. The rumors, reported by the always authoritative Wall Street Journal and by Bloomberg, arise on the sidelines of a complex financial and structural event that is jeopardizing Sharp's own future.
The giant from Osaka, the oldest Japanese IT company (invented the first transistor computer in 1964, but was founded in 1912 to produce belt buckles, achieving the first commercial success with a snap pencil, Ever Sharp, in 1915 ), is planning the layoff of 8,000 people, a painful move for a company that has never used the overtime weapon to deal with the crisis since 1950. Indeed, while over the years the two main domestic competitors, Panasonic and Sony were bringing plants out of the country, Sharp was able to produce profits and jobs by growing its plants in Japan.
But for four years now the collapse of TV sales, the downward costs of LCD panels (where Sharp has always sprouted huge profits thanks to its cutting-edge technologies) and the strengthening of the Yen which has favored Korean rivals, have determined a chain of budget losses that are worsening and, consequently, putting financial resources in reserve. Hence the decision to restructure its workforce by offering incentives to 5000 employees to leave the company and transferring the plants abroad with the 3000 employees who operate the assembly lines. But layoffs are only part of a major restructuring: Sharp plans to sell the copier business, that of air conditioners, to sell the Japanese plant for the production of solar panels and to create a separate company for the management of the TV screens system in central Japan. Finally, he must find a way to obtain new loans from Mizuho Corporate Bank Ltd. and Bank of Tokyo Mitsubishi UFJ and to extend the current, not easy operation given the scenario.
Investors remain very worried because the impression, as Nobuo Kurahashi, an analyst at Mizuho Financial Group, says that Sharp is desperately trying to monetize for money in the short term, rather than restructuring to return to growing in the future and in fact his credits to in the long term they have been degraded from Standard & Poor's to BBB, only one step above the "garbage level" and within 12 months the judgment could be further lowered to BBB-. It is no wonder that Sharp stocks are the worst of the Nikkei 225 and have touched the lows of the past 38 years just on the day of August. Even less surprising Foxconn, which should be one of Sharp's lifeline with the purchase of a large share, has stated that it intends to renegotiate the initially established price (550 Yen per share for a total of 9.9% capital), citing the drop in market value, which plummeted by 25% since March, when the agreement was made. Sharp claims instead that the clauses are still in force, but is also said to be willing to discuss how to make the pact more effective.
Sharp's crisis affects Apple very closely for various reasons. The Japanese company supplies components for iPhone and iPad, could supply the displays of the new iPhone 5 and, above all, be the basis of the next generation Apple TV due to the agreement with Foxconn. there is no doubt, in fact, that the crisis and the events connected with the partnership with the Chinese led by Terry Gou (who personally invested in the pact with Sharp) are destined to affect Cupertino's strategies more or less directly.