The headline news yesterday in the Japanese business media was Samsung taking a Y10bn ($100m) stake in Sharp. Not enough to save it says the Nikkei($) who estimate it needs around ten times that to keep its capital ratio out of the danger zone.
Sharp received Y10bn from Qualcomm at the end of last year but the Y67bn from Taiwanese firm Hon Hai is looking unlikely.
So it’s resorting to the traditional Japanese safety net of talking to its main banks, Mizuho and Bank of Tokyo Mitsubishi UFJ, which will probably result in some of the banks’ personnel joining the Sharp management ranks to help out.
Lex of the Financial Times reckons Samsung took a stake so it would have first dibs on any technology should Sharp collapse.
It’s hard to imagine the once mighty Sharp, an Osaka company through and through, with all that implies (tough, commercially minded and “so tight they’d skin the fleece off a gnat” as one Sharp UK employee once put it to me) could really cease to exist.
But it turns out Abe’s government is working on plans($) to force troubled companies into bankruptcy and to encourage companies to take on staff from struggling companies. Clearly the new government is hoping a bit of creative destruction is what is needed to revive Japan’s fortunes, rather than letting zombie companies stumble on.
The pressure is on and there are complaints that Sharp’s President and Chairmen (current and ex) are showing a lack of leadership and decisiveness – as previously noted here and in the Wall Street Journal here.
Update: Further restructuring news has been coming out – Sharp will indeed appoint an ex Mizuho executive to a senior post, with the appointment of someone from Bank of Tokyo Mitsubishi UFJ likely to follow. There’s also a lot more on how Hon Hai and Sharp fell out over the Samsung deal in the Nikkei Weekly ($). Also Sharp is selling off some businesses (systems development business to IBM Japan) whilst very much hoping some of its new core proprietary technology (IGZO) will prove a saviour. Seems like many bets are being placed, in the hope that at least one of them will pay off.
For more content like this, subscribe to the free Rudlin Consulting Newsletter.Read More