Cash-Poor Sharp Mortgages Display Factories 111
Sharp is one of the small handful of companies that actually make the LCDs that go into products badged with many other companies' names. Now, itwbennett writes "The company was asked by one of its main banks to put its physical assets, including its Apple screen plant, up as collateral for about $2 billion in emergency loans, according to an IDG News Service report. Sharp expects to lose over $3 billion this fiscal year."
Re:Wha? (Score:5, Insightful)
Sharp makes amazing screens why are they in trouble? What did I miss?
Just because you make a fantistic bunch of hardware doesn't mean you can't have a load of bozos running around the board room with seltzer bottles in one hand and balloons in the other. Remember how bad Commodore was at marketing the Amiga? Ready ... FIRE! Aim ...
Anyone else have trouble parsing the title (Score:5, Insightful)
Cash-Poor (adj) Sharp (adj/noun) Mortgages (verb/noun) Display (verb/adj/noun) Factories (noun)
Re:Wha? (Score:5, Insightful)
Or DEC. Or Silicon Graphics.
Actually, it's starting to look like quality of products is always inversely proportional to quality of directors/management. If that isn't somebody's first law of economics, I'm claiming it.
Price Wars (Score:4, Insightful)
The LCD screen market has been brutal for the past couple of years. Plants have high fixed capital costs. i.e. building plants are expensive. The market has surplus capacity. i.e. everybody thought people would be buying their screens. In this situation, if the plant is running you might as well run it at full throttle – it is almost as cheap to build 100 rather than 80. This leaves a company with 2 choices.
First, you can shut down the factory and leave all of the capital ideal. Even worse, with the technology cycle so fast, when you restart the plant it is going to be obsolete.
Second, you can engage in a long drawn out price war. Unfortunately Sharp is facing Samsung who has the same problem – overcapacity – but have deep better diversified pockets to survive the price war. The second option is better – you bleed slower.
If you want an analogy, take a look at the airlines. The price wars have been so brutal that, IIRC, the total return on equity invested in airlines (as a whole) is about 0% for the past 50 years.
Re:Anyone else have trouble parsing the title (Score:4, Insightful)
This title is a good argument against capitalizing every word. Proper nouns would be evident.
Re:Wha? (Score:5, Insightful)
They got hit by a double whammy. Foreign exchange rates on one hand, and more nimble Korean competition on the other.
Strong Yen eroded their profits, while at the same time Samsung and LG made huge aggressive bets by pouring billions into new LCD and LED making equipment and benefited from economy of scale. Basically the Koreans are doing to the Japanese companies what the Japanese themselves were doing to American companies back in the 70's.
Samsung makes a healthy profit from TVs, while Sony and Sharp loses money on every TV they make.