Sharp

Anna S BA 3103 Critical outline Paper tangy Sharps third quarter results showed very disappointing performance. The social club reported a ? 249. 1 jillion ($3. 12 billion) loss. Moreover, it is forecasting a ? 450 billion, or $5. 6 billion, loss for the fiscal year through 2013. Apparently, the company is anxious through more(prenominal) capital than it is generating and having difficulty in securing short-term financing. Also, the company is considering selling some holding in former(a) companies and office building in Tokyo.Furthermore, its thinking to sell television assembly plants in Mexico and China, which would reduce its payroll by 3,000 jobs, added to the 5,000 positions assigned for layoff earlier this year. The company has decided to cut the menstruum Sharps payroll by 14%. In addition, Sharps shares are garbage down 75% this year. This paper will conduct a situation outline of essential and external environment of Sharps weak performance. It will also summari ze the primary causes of companys weak performance. Internal Analysis Financial ProblemsCurrently the company faces two problems it is under pressure to reduce interest-bearing debt, which increased to ? 1. 25 trillion since June 2011 and, also, needs to repay ? 200 billion of exchangeable bonds that mature in September 2013 (Daisuke Wakabayashi). At the end of June 2012, the companys cash, accounts receivable, inventory and other assets couldnt cover its short-term liabilities. The company is struggling to raise cash. Sharps profit loss for the first half included ? 84. 4 billion in restructuring costs, including a ? 30. billion impairment of assets in its solar batteries unit, a ? 53. 4 billion write-down on inventory, and a ? 61. 0 billion write-down on deferred tax assets. Also, at the end of September, the Sharps shareholder equity ratio fell to on a lower floor 10 percent, which is half the rate generally considered a healthy minimum. Sharp remains highly dependent on short-t erm borrowings. Weak internal cash flow has forced the company to pay off unsecured promissory note mostly with bank borrowings (Reuters). In addition, the company is currently considering alliance with other companies.You can read also Thin Film Solar CellExternal Analysis Product Demand The Sharps main products, liquid crystal display TV and monotone panels, were accounted for 60% of total revenue in 2012, however, the demand substantially weakened, especially in comparison to Korean rivals. For the first time in the company history, shipments of liquid crystal display TVs fell year-over-year, declining just over 3% to 43 million units. The decline hadaconsiderableimpact on the market, with total TV shipments falling approximately 8% year-over-year in the first quarter of 2012, the drastic decline since the second quarter of 2009.When the market slowed down, Sharp has been left with excess capacity at its municipal plants. Sales of LCD TVs nearly halved in the October-December quarter. The manufacturer of electronics products and their components also reported quarterly sales of solar cells fell by a third from a year ago, slowing demand and increased competition from Chinese makers (James Topham). Global Economy Sharp has struggled with a slow economy, losing the power it once got from transition to spherical digital broadcasting and from subsidies for purchases of energy-efficient goods.Demand for LCD televisions in developed economies has been saturated however, growth in developing markets is slowing. Also, the strong yen has made Sharps products more expensive overseas. Therefore, it is difficult for the company to compete in the global market. Product prices were also affected by Japans relatively high labor cost, electricity, imported fuels and nude materials. In addition, euro debt crisis became another reason for the slow growth in the world economy (James Topham). Competition Sharp faces increased competition from very large electronic compani es such as Apple, Samsung and LG.SamsungElectronicsCo. , Ltd and LG Electronics, Inc. have generated better profits and strengthened market positions in the TV and panel businesses during 2012, supported by an improved product mix. Samsungs flat panel TV revenue share remains the largest in the industry, almost 26% (Dan Graziano). Samsung is also the top brand in the key segments of LCD TV, 40+, LED-backlit LCD, and 3D TV. Also, the company benefits from favorable exchange rates and aggressive investments. Samsungs current capitalization is $163 billion and Apples $634 billion.As opposed Sony, Panasonic and Sharp combined are nowworth only $54 billion at current market values(Michael Fitzpatrick). Summary Based on internal and external analysis of Sharps recent activities, the primary causes of companys poor performance are 1) the company is struggling to raise internal cash flow and, therefore, cannot cover its short-term liabilities 2) the demand for LCD and flat panel TVs has sub stantially weakened due to global economy slow down 3) Sharp is facing a fierce competition from Samsung, LG and Apple, which currently holding the largest market shares in electronic manufacturing industry.Bibliography 1) WAKABAYASHI, DAISUKE. Sharp Says Its Future Is at Risk. 1 Nov. 2012. 7 Dec. 2012 http//online. wsj. com/article/sb10001424052970204712904578091761289023722. html. 2) Reuters. TEXT-SP summary Sharp Corp.. 30 Nov, 2012. 8 Dec, 2012 http//www. reuters. com/article/2012/11/30/iduswlb148420121130. 3) Topham, James. Sharp Corporation Blames Falling LCD TV Prices, Increase In Yen For Forecast $3. 8 Billion Loss. Feb. 2012. 8 Dec. 2012 http//www. huffingtonpost. com/2012/02/01/sharp-corporation-lcd-prices_n_1246028. html. 4) Graziano, Dan. GLOBAL LCD TV SHIPMENTS FALL FOR THE FIRST TIME EVER. 21 Jan. 2012. 8 Dec. 2012 http//bgr. com/2012/06/21/global-tv-sales-lcd-shipments-down/. 5) Fitzpatrick, Michael. Fear and loathing in Japan. 18 Sep. 2012. 8 Dec. 2012 http//tech. fo rtune. cnn. com/2012/09/18/fear-and-loathing-in-japan/.