Sharp Corp to exit the TV set business in Americas
31 July 2015
Japan's Sharp Corp today said it would exit the TV set business in the Americas and consider additional measures to grow finances, after it posted a bigger than expected quarterly loss on weak sales of smartphone displays.
According to the Japanese electronics maker, it would sell its TV manufacturing plant in Mexico and license its brand in the Americas to China's Hisense Group.
Hisense said in a separate statement that it would pay $23.7 million for the business.
Osaka-based Sharp was, at one time, a highly profitable manufacturer of premium TVs and a favoured screen supplier to Apple. However, it had not been able to cope with Asian rivals.
The company, in May sought $1.9 billion in its second major bank-led financing in three years and in return, promised to axe 5,000 jobs, accounting for 10 per cent of staff.
"Sharp has not been able to fully adapt to the intensifying market competition, which led to significantly lower profits compared to the initial projections for the previous fiscal year, and has been suffering from poor earnings performance," Sharp said in a statement explaining the TV business sale.
Sharp, which recently secured the second bailout in three years from its main banks, is in the process of implementing a large-scale restructuring plan, including thousands of job cuts and the disposal of some non-core assets.
The company suffered a loss of ¥222.35 billion in the fiscal year ended in March.
The latest quarterly result, which came in worse than a market forecast for a loss of ¥27.77 billion, left analysts in doubt about company's projections of an operating profit of ¥80 billion for the current fiscal year.
Apart from its struggling solar and TV businesses, the company had had to face fierce price competition in smartphone display panels, which chief executive Kozo Takahashi described as a core business for the company.
According to some analysts, Sharp should exit the business because its scale would not allow it to compete against rivals such as LG Display Co of South Korea.
According to Sharp, the deal with Hisense covered most of North and South America, with the exception of Brazil.