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Sharp, Sony Are in the Red

{complink 4907|Sharp Electronics Corp.} and {complink 5114|Sony Corp.} posted losses for the second quarter of 2012. This contrasts with their Japanese compatriots, Panasonic and Toshiba, which reported profits for the quarter. (See: Panasonic, Toshiba Profitable; Demand Remains Weak.)

Sharp reported a net loss of 138.4 billion yen ($1.76 billion) on sales of 458.6 billion yen. It told analysts that it expected to remain in the red for the rest of the year, and that it will cut 5,000 jobs by March. These are the first layoffs the company has announced since 1950, and news reports say executives are taking salary cuts of between 20 percent and 50 percent.

Here's what the Financial Times said:

Osaka-based Sharp has fallen on especially hard times as a result of its narrower focus on TVs, from which it derives about three-fifths of its revenues. In March, it struck a deal to sell a 10 per cent stake in itself for [76 billion yen] to Hon Hai, the Taiwanese contract manufacturer of everything from Apple iPods to Sony PlayStation video-game consoles.

Sony said its sales rose slightly from a year earlier to 1,515.2 billion yen ($19,180 million). However, it reported a net loss of 24.6 billion yen ($313 million), versus the 15.5 billion yen deficit it reported for the second quarter of last year.

Like Panasonic and Toshiba, Sharp and Sony expect business to be challenging for the rest of the year. Sharp reported weakness in its TV, LCD, and solar panel business. Sony cited its TV line. The yen's strength is also hurting Japanese companies, because customers are opting for lower-cost panels and related products from Korea and Taiwan.

15 comments on “Sharp, Sony Are in the Red

  1. t.alex
    August 3, 2012

    We heard so much news nowadays of china and Taiwan picking up while japanese companies are in the red not only now but also he next few quarters. What happen to Japanese culture of hardworking and innovation ?

  2. Barbara Jorgensen
    August 3, 2012

    talex: great question. There are a number of different opinions, but one is Japan hasn't embraced outsourcing as much as the ROW and as a result has not benefited from the efficiencies that can ge gained. Since the earthquake, many of the factories there have been damaged and/or becoming obsolete. So there is not a lot of investment being made in new technology, whihc is also Japan's forte. Although vertical integration seems to be making comeback, Japan's structure appears to be getting old and needs and upgrde to become competitive.

  3. _hm
    August 3, 2012

    Japanese vendors are readjusting and will come back with lots of profit and new interesting products. Looks at Toyota. They have large profit and will become world's largest auto manufacturer. Similalry, Sony and Sharp will have bright future.

     

  4. t.alex
    August 3, 2012

    That's not the case for Renesas I think. It has been losing and losing for quarters and years.

  5. Anand
    August 4, 2012

    It told analysts that it expected to remain in the red for the rest of the year, and that it will cut 5,000 jobs by March.

    Sad to know that Sony which was once the innovation king is facing such situation. Sony which originally pioneered the WalkMan technology lost the battle to Apple which improved on walkman technology and released its portable music players.   I really hope Sony will use this cost-saving measures to build new innovative products.

  6. Anand
    August 4, 2012

    Looks at Toyota. They have large profit and will become world's largest auto manufacturer. Similalry, Sony and Sharp will have bright future.

    @_hm, I am not sure if we can compare auto industry with electronics industry. Electronics industry is more competitive becase you have players like Apple, google etc which are always trying to innovate new products. So the only way Sony can overcome this competition from other companies is to start innovating. 

  7. Anand
    August 4, 2012

    but one is Japan hasn't embraced outsourcing as much as the ROW and as a result has not benefited from the efficiencies that can ge gained.

    @Barbara, I always felt Japanese dont outsource their work because they themselves are so efficient hard working people. Do you think they have learnt a lesson now ? Will they now start outsourcing their work ?

  8. Adeniji Kayode
    August 4, 2012

    @t.alex,

    we should expect to see more of that.

    Some are working harder, but some are working smarter.

  9. Adeniji Kayode
    August 4, 2012

    @anandvy< i agree with you on that. I feel alot of comsumers will be disappointed is Sony just go down like that without a fight. All around me, I still have people that will not buy any electronics if its not Sony.

  10. _hm
    August 5, 2012

    Lately Japanese vendors (auto, electroincs and others) are more aggressive. They beat Korean vendors in thier own game of low price products with very low margins. But Japanese product may be more sound technically. It may take some time. But Japanese organization will be doing very good.

     

  11. Barbara Jorgensen
    August 6, 2012

    I think Japanese companies are far from being out of the game, but these results are pretty awful. I think Japan has resisted outsourcing in favor of vertical integration because companies are better able to control and manage their technology. But if Japan can't compete on price, such as in the LCD business, they are going to lose both market share and reputation. (Look how quickly Foxconn renegotiated with Sharp.) Innovation also requires cash, which Sharp and Sony clearly are struggling with. I wonder if we might see more ventures such as the government-backed LCD business that free up the innovators to do more…well, innovation.

  12. elctrnx_lyf
    August 6, 2012

    Definitely Japanese companies are struggling to get of the losses. I think Koreans are definitely giving them hard competition and even beating them easily. We have already seen mergers in Japan LCD business and I believe this will continue to happen in another segments also.

  13. Jay_Bond
    August 7, 2012

    I will be curious to see how bad Sharp is affected in the next 3 to 6 quarters. Sharp has always made a high quality television, but I think they might have put too much focus on that business. Considering most households have multiple televisions, most of which have been upgraded due to lower costs, it is hard to believe the executives at Sharp feel that they can continue to drive business through a majority of television sales.

  14. Barbara Jorgensen
    August 7, 2012

    Yes, Sharp i really hurting. They still continue to make great products, but I thnk price-wise they are getting hammered. Worse, it looks like new partner Foxconn is re-evaluating its relationship with Sharp. Foxconn is said the be lowering the amount of its investment at a lower price becuase Sharp is hurting so much. I'd expect to see more layoffs…I'm not really sure what new products will turn things around.

  15. Adeniji Kayode
    August 10, 2012

    @hm,

    Korean products are regarded to be more stable in my part of the World while china product are regarded as fake products most times

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