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Cash-Poor Sharp Mortgages Display Factories
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."
Sharp makes amazing screens why are they in trouble? What did I miss?
My Aquos TV (with its added yellow pixel) ruins movies by having sufficiently vibrant color to make the demarcation between green-screen and foreground characters completely obvious. Make-up too looks far less natural and more like Broadway stage makeup. The pressure for the movie industry to bring up their game will decrease significantly with these folk out of the picture.
If the title of this post isn't reason enough to reform the English language, I don't know what is. At first I though it had something to do with homeowners refinancing.
Cash-Poor (adj) Sharp (adj/noun) Mortgages (verb/noun) Display (verb/adj/noun) Factories (noun)
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I would actually rather not have an unnaturally vibrant screen. I want a screen that shows me exactly what the director intended the picture to look like.
When I was checking out TVs, I quickly marked Sharp off my list. IMO their panels have the worse viewing angle washout of any of the panel types and no real compensating high point (Yellow pixels are more gimmick than benefit).
I see lots of talk from Sharp, but I have never seen a Sharp screen I want to buy, so no great loss IMO.
So in the future they'll have interest payments to meet in addition to their other factor costs for creating displays.
In the short term, they can continue to meet whatever short-term debt obligations they have. (Bonus question: What are likely to be their short term debt obligations?)
In the long term...who knows? Their future ability to pay appears less secure.
PS: I don't reply to ACs.
Now they won't be able to build houses/hotels or collect rent!
What are "Sharp Mortgages", and what caused them to be cash-poor. Is this part of the toxic asset relief program. Apparently, they're displaying their factories. So mayb these were commercial loans for industry used to build factories...
Hmm....
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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.
Cash-Poor Sharp Mortgages Display Factories
I've heard of a lot of mortgage companies, but not "Sharp Mortgages."
And what do they need factories for, and why are they displaying them?
Oh, I get it, they need cash and hope the buzz will attract investors.
Oh, and it's "Displays" not "Display." Unless I'm reading it wrong and there are a bunch of starving but very bright mortgages out there which are showing off their factories, in which case I apologize.
Hmm, this could be the next correct horse battery staple. I hope this isn't Mr. Okuda's password.
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
With the rumors of an Apple TV odds are Sharp is already a fabrication partner on that project. Apple could buy the plant and transition other product assembly away from Foxconn. I'm sure Japan would love to see the jobs come over from China.
If Sharp goes under the may have to go to Samsung for displays. I'm sure they would do it but there will be an extra $1B charge tacked in somewhere...
Any insufficiently advanced magic is indistinguishable from technology.
This just a few months after settling for $200 million in an LCD price fixing suit. Guess they were counting on keeping those artificially high prices going to break even.
Isn't it just a rumor that Sharp will be making iPhone screens. AFAIK, there are no sharp screens in any shipping Apple product.
Desktops use LG IPS screens. iPhone 4s uses LG IPS screens. iPad 1/2 use LG IPS screens. iPad 3 uses Samsung PLS(their version of IPS) screens.
Sharp??
How is this news? A company obtaining finance and giving their bank good security is normal practice in business. If anything is weird here it is that Sharp does not already have these assets securing loans. The tone gives me the impression this is meant to be bad news for Sharp, but there is no clue why in the summary.
Reading TFA, it seems the story here is that Sharp is in deep financial trouble, but the good news is that they have been able to refinance, thus answering Moody's recent concerns. The particular importance of Sharp is that they are seen as symbolic of current weakness in the Japanese electronics industry, they are one of the few manufacturers of LCD screens, and the lack of finance had cast doubt on their ability to make screens for Apple's upcoming new iPhone and iPad products.
In the long term...who knows?
Buyouts by Chinese companies. Japan is no longer an indispensable part of the electronics supply chain and can not command prices sufficient to fund the very high corporate tax rates its government imposes or the high compensation its workers expect.
You should expect to see more Japanese companies floundering. Some marquee names like Sharp will try to remain independent through debt and public offerings. Others will seek out partners and buyers. In any case the plant and capital will evacuate to lower cost parts of Asia, Eastern Europe and even Africa as the decline accelerates.
Sharp's plant is in Japan and they can't compete with Chinese LCDs.
I wonder, though, if AAPL shares might be affected by it. I need to check if Apple seems to have second-sources for their display tech. The Sharp plant suddenly looks like a lost case in the long run.
A successful API design takes a mixture of software design and pedagogy.
This is what happens when free market is working.
Sharp bet on large LCDs. Turns out market didn't want them as much as Sharp thought. Market went the other direction - smaller screens on iPads and smart devices
Sharp made a bad decision. Sharp didn't make what the market wants.
Seeing the bad decision they made, banks are reluctant to loan them more money without Sharp offering something as a security - their factories.
Don't let libertarians fool you thinking capitalism is all sunshine and rainbows and banks rush to your feet the moment you say you're a "business". If you believe that, then perhaps you would like to loan ME some money? I'm er... starting a business selling bridges.
the market is saturated. major players like Philips have basically handed over their factories to get out from under the pressure years ago. we're left with Sharp, Samsung, Mitsubishi (Panasonic,) and several Red Army Factions.
just like there used to be a dozen CRT plants in the US alone, dwindled to channel master and Sony, and they're all closed. Clinton is closed in China. there may not be a working CRT plant left any more, anywhere.
and as the complexity and demand for higher grade screens rises, it's a double squeeze... everything you have is obsolete and pennies per diagonal inch, but everything you need to make yesterday is already on the verge of oversupply because the competition's plants are already announced and half-done.
if this is supposed to be a new economy, how come they still want my old fashioned money?
For those that don't know, Sharp recently built their tenth-generation glass substrate and LCD factory in Sakai, Japan. This is, bar-none, the most advanced, efficient, and green LCD manufacturing facility in the world. To further lower costs, their main suppliers moved their factories just next door to the Sakai plant.
When Sharp first made this plant, it seemed like Japan would come to dominate the LCD industry, again. Sharp had deals with all the major LCD players to manufacture parts for them to use in their own brands. Notably, SONY was a huge investor in the Sakai facility. The Sakai plant was going to produce the best LCD TV components, and SONY has a long history of using top-of-the-line components in their products.
Sharp has fallen on hard times because of two primary issues:
1. The economy, stupid
2. The inexplicable and dramatic rise of the yen
When Sharp first made the facility, it made it big, and it expected big demand. BOOM! global economic meltdown. That seriously hurt Sharp, but at least they still had their deals with other companies to buy their industry-best components. Well, a consequence of the meltdown, quantitative easing, uncertainty, etc, is that the Japanese yen has skyrocketed in value.
I studied abroad in Japan from 2007-2008. At that time, I got about 121 yen per USD. Now the rate is half that. That means Made in Japan is 50% more expensive in the US (and most everywhere else) than it was, before. This is what is killing Sharp. This is what is killing all Japanese manufacturers. Modern Japan developed as an export economy, and with the yen as strong as it is, it is struggling to export. Many of their industries are diversified; for example, Honda has the ability to manufacture the same Honda Civic in Japan or the US, then ship it to whichever country it wants to sell it in depending on the exchange rates. Sharp has put all its eggs in the Made in Japan basket (not a bad decision at the time; I would certainly prefer a Made in Japan TV for a small premium, and I know others would, too), and now that basket is way too expensive to compete.
Unless the yen weakens, Sharp will fail. If they fail, somebody is going to take over the Sakai factory, because it is just too new, too advanced, and too efficient to let disappear.
More importantly - the company will continue to be able to pay the CEO and Board their expected bonuses while it gradually bleeds to death and hopes that the LCD market will pick up again.
--- Most topics have many sides worth arguing, allow me to take one opposite you.
Nissan - now owned by Renault from France
Olympus - now still embroiled in bitter internal strife
Sharp - cash squeeze and facing bankruptcy
Elpida - bankrupted and bought by Micron
Muchas Gracias, Señor Edward Snowden !
They should sue Samsung. They make rectangular LCDs as well.
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