In T.S. Eliot’s 1922 poem The Waste Land, he opens with this verse: “April is the cruelest month…” For many Japanese manufacturers, those words couldn’t ring more true.
One in particular is Sharp, who has been struggling with profitability ever since the Great Recession. In a recent news story from TWICE, the company confirmed it will be laying off as many as 6,000 employees worldwide, with 1/3 of those cuts possibly to come from Sharp’s U.S. operations.
Sharp’s market share has dwindled considerably over the years. At the start of 2006, the company held a 21% worldwide market share in in the LCD television business, but that was the high water mark – it’s all been downhill since, as Sharp and other Japanese brands had to deal with aggressive marketing and pricing from Samsung and LG, and now Chinese brands are entering the fray.
Sharp isn’t like any other CE manufacturer. Only a handful of them operate their own LCD panel fabrication lines, and Sharp has the world’s largest in Sakai, Japan. This Gen 10 plant rolls out LCD motherglass that’s used in everything from televisions and laptops to dashboard displays, mobile phones, and tablets.
The Gen 10 facility had the misfortune to open during the depths of the recession, and Sharp was forced to sell some of the plant’s idle capacity for twenty cents on the dollar to Hon Hai Industries (Foxcon – Apple products) to raise cash. (Hon Hai recently offered to buy more shares of Sharp in return for a seat on the company’s board.)
Although Sharp can make larger cuts of 2K and 4K (and even 8K) LCD glass at very competitive prices, consumers just aren’t buying enough Sharp Aquos TVs – even the Quattron models with the extra yellow pixel. And that’s not helping things, as Sharp reported a $190M quarterly loss and a $250M loss for the entire fiscal year.
According to a story on the Asia.Nikkei Web site, “The company plans to re-engineer operations in unprofitable businesses, at home and abroad. The television business in North America could be on the chopping block. Management apparently concluded that cutting jobs is an unavoidable step toward reforming the company’s high-cost culture.”
It’s likely too late to turn things around at Sharp’s TV operations, especially with TV prices in free-fall. And things aren’t much better at competitors Toshiba and Sony, both of whom have yet to announce their final earnings for 2015. Both companies have seen a major drag on earnings caused by television operations and Toshiba has already pulled out of the North American TV market, retreating to Japan.
Cruelest month, indeed!
Posted by Pete Putman, April 9, 2015 3:37 PM
About Pete PutmanPeter Putman is the president of ROAM Consulting L.L.C. His company provides training, marketing communications, and product testing/development services to manufacturers, dealers, and end-users of displays, display interfaces, and related products.
Pete edits and publishes HDTVexpert.com, a Web blog focused on digital TV, HDTV, and display technologies. He is also a columnist for Pro AV magazine, the leading trade publication for commercial AV systems integrators.