Strategy in TECH...
The media in Japan positively exploded this week with the shocking news that Sharp has notified Samsung it will no longer supply the world’s top seller of LCD TVs with the panels they need for their sets. Samsung was Sharp’s largest customer, but in a shocking power move, after negotiations broke down – Sharp said no deal.
News comes out of Japan that the new owners of Sharp are in the process of buying back a building the old management sold off when seeking to improve profitability by reducing overhead. Now, new management – made up of former Foxconn executives – are doing an about-face and looking to repurchase the building, in a move that has Japanese media scratching their heads.
Sharp Corp., a division of Taiwan’s Hon Hai Precision Industry Co. – better known as Foxconn – is rethinking its previously determined plans for business success. As the company was struggling with financial hardships prior to the closing of their acquisition by Foxconn, Sharp made several cost cutting moves, including selling the North American and Europe rights to the Sharp TV brand to certain OEM manufacturers. Now, as they ponder how to drive revenue growth, there are reports they are changing their minds on these and other deals.
Big changes are coming to Sharp, Corp. in the wake of their acquisition by Hon Hai Precision Industry Co – better known as Foxconn. News out of Japan notes that the deal between Sharp and Foxconn officially closes at the end of this month. According to both parties, the acquisition is proceeding smoothly and is fully expected to close on time.
In yet another sign of Japan’s struggle with the flat panel TV business, Panasonic Corp. will stop all LCD panel production at its last such factory. Reports out of Japan say the company has determined that competition from Korea and China will forever preclude it from earning a profit in the panel production business. Many in Japan suggest that this news represents the end of an era of Japanese dominance in the TV business.
The ink was barely dry on their $3.5 billion dollar acquisition of troubled Japanese giant Sharp Corp., when Foxconn’s CEO Terry Gou was forced to admit that overall orders for goods produced by the Taiwanese OEM manufacturer are dropping. Gou was essentially pressed to make the admission by China’s Premier Li Keqiang on Tuesday.
Sharp Corp., the embattled Japanese manufacturer best known for LCD flat-panel televisions and soon to be division of Hon Hai Precision Industry Co., (a Taiwanese company better known as Foxconn) is said to be strongly considering cutting another 1,000 jobs at the company as a result of continuing poor performance. This would be the third round of significant employment cuts in the last four years.
The Boards of both Hon Hai Precision Industry Co. (better known as Foxconn) and Sharp Corp. have approved the acquisition of 66% of the outstanding shares of Sharp by the Taiwanese OEM manufacturer of largely Apple, Inc. products. This day came largely as a result of some savvy negotiations and tactics from Foxconn’s CEO Terry Gou, who overcame tremendous odds to score this win.
In what most Japanese media are calling a due diligence blunder, a potential deal for Hon Hai Precision Industry, better known as Foxconn, to buy Sharp Corp. was nearly scuttled when over $3 billion in potential additional liabilities suddenly came to light. The development caused Foxconn to pull back and, ultimately, launch an even deeper and more detailed analysis of the opportunity.
Sharp Corp., the troubled Japanese manufacturer of LCD panels and TVs, finds themselves in unfamiliar territory – multiple potential parties want to buy them and are bidding the price up. Unfortunately, this situation has emerged as a result of their deepening financial troubles and whatever offer they accept is likely to change the company in fundamental and unknown ways…forever.
But perhaps the biggest surprise of all is that despite political pressure to accept an offer from a Japan government-backed bidder – an outcome that everyone in Japan expected – the company has let it be known that it is favoring a bid from a foreign bidder…Taiwan’s Foxconn.
