Unable to compete against upstart LCD manufacturers, the 103-year-old Japanese consumer electronics company Sharp is getting out of the television business in the Americas although its brand name will survive. The Chinese company Hisense is buying Sharp’s factory in Mexico for $23.7 million and will continue to use the Sharp name as part of the deal.
“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,” the company said in a statement, reports Ritsuko Ando for Reuters.
“Friday’s announcement is a sharp turnaround from two months ago, when [CEO Kozo] Takahashi had said that the panel unit, a core part of the company, would remain wholly-owned as it was an essential component of the turnaround plan,” Takashi Mochizuki reports for the Wall Street Journal. Sharp “is restructuring its main businesses, such as consumer electronics, solar panels and display panels, amid growing competition,” after getting its second bailout in three years from its banks, writes Mochizuki.
“It’s pretty clear that they are falling behind their own targets,” Makoto Kikuchi, CEO of Myojo Asset Management Co., tells Bloomberg’s Pavel Alpeyev and Grace Huang. “The banks have pushed back the risk of collapse, but couldn’t stop the hemorrhage. There is only so long the company can survive on life support.”
Alpeyev and Huang report that neither Sharp Aquos TVs nor its smartphones are among the top 10 sellers globally by units.
“Despite being the first brand to see the potential of LCD screens as domestic televisions, Sharp has consistently struggled more than some of the other big Japanese brands to handle the stiff competition created on the TV scene by the arrival of Korean manufacturers Samsung and LG Electronics,” writesForbes contributor John Archer. “And with new competition looming from Chinese brands like Hisense, it seems Sharp just couldn’t see any way of turning its North American TV fortunes around.”
Hisense got started as a radio factory in 1969, reports CNET’s Claire Reilly, and it now sell major appliances and white goods, TVs, tablets and laptops. It claimed overseas sale revenue of $2.6 billion in 130 countries worldwide last year.
“But while Hisense continues to be a strong brand in the Chinese market, similar to fellow Chinese players TCL, Haier and Changhong, it has been pushing to achieve the market dominance and brand awareness enjoyed by Korean heavyweights Samsung and LG, and Japanese powerhouse Sony,” Reilly observes.
That’s where the Sharp name comes in, writes Steve Dent for Engadget, pointing to a company statement: “The acquisition [of Sharp's brand] will help Hisense gain an upper hand in both North and South America.”
“Sharp TVs are perhaps most notable for their ‘Quattron’ technology, which introduces a fourth sub-pixel into the traditional RGB matrix,” Lee Neikirk writes for Reviewed.com. “In recent years, Sharp has also experimented with effective upscaling — as seen in the company's "Beyond 4K Ultra HD" TV — and a moth eye screen that diffuses light. Sharp also produced one of the best-received LCD televisions of all time, the Sharp Elite.”
“Sharp will still maintain a presence in the Americas, just not in TVs. It'll remain a consumer electronics brand, and it'll keep selling products like ovens, photocopiers, and solar cells,” writes Jacob Kastrenakes for The Verge, although he points out that “structural reforms” still to come at the company may result in it stepping away from other segments.
Atsushi Osanai, an associate professor at Waseda Business School, tells the WSJ’s Mochizuki that Sharp “should focus on unique consumer electronics goods,” such as direct-current air conditioners and its Tea-Ceré automated tea makers.
Getting out of a fight you can’t win is also a healthy choice.