Beleaguered Sharp’s problems present an opportunity for mighty Apple

“Apple display supplier Sharp Corporation recently reported its financial results for the fiscal year ending March 31,” Mark Hibben writes for Seeking Alpha. “The bleak financial picture at Sharp has caused a lot of speculation about possible blow back to Apple, including loss of Apple’s ‘investment’ in Sharp. But Apple has no direct investment in Sharp, and the only possible threat posed by Sharp’s situation would be the loss of a valued supplier.”

“Sharp’s financial results paint a bleak picture. For the year, revenue declined 4.8% to $23.3 billion, while it posted an operating loss of $402.9 million (at current exchange rates),” Hibben writes. “Last year, Sharp was doing much better, with an operating profit of $909.9 million.”

“Apple might take a stake in Sharp itself. Apple is highly motivated to put its overseas cash to good use, and securing a stable supply of a crucial component is a good way to do that,” Hibben writes. “This appears to be a golden opportunity for Apple to use its cash to good advantage as well as head off a possible incursion by rival Samsung, which might have the same thing in mind… How might the market react to such a development? Given that it’s Apple, I doubt the development will be viewed positively, and we’ll hear lots of wailing about the Sharp ‘boat anchor.’ This is just more noise for Apple investors to ignore. Apple must use its cash in order to become more vertically integrated. Opportunities to do so are relatively rare. I believe that Apple must take advantage of the opportunity presented by Sharp.”

Read more in the full article here.

MacDailyNews Take: Intriguing, but does Apple really want to take a stake of a perennially-struggling company like Sharp? What exactly does Sharp offer Apple that they can’t get at other suppliers who have figured out how to run sustainable businesses? Can Apple provide IP to Sharp that makes them viable or, at least, useful to Apple? Or, perhaps, due to their large volumes, would simply gaining the bulk of Apple’s display orders stop the bleeding at Sharp?

Related articles:
Apple display supplier Sharp warns on ability to stay afloat after $1.9 billion loss – May 14, 2015
Apple iPhone display supplier Sharp boosts operating profit – August 1, 2014
Sharp dedicates entire LCD plant to Apple – June 30, 2014
Hon Hai in no hurry to finalize Sharp deal – June 26, 2013
Sharp to replace chairman, president after losses – May 14, 2013

15 Comments

  1. The problem is that Sharp isn’t losing the money in the display business. It’s all of the other commodity consumer goods that are the anchor. Why would Apple want a part of that action.

  2. No need to buy Sharp. If apple’s displays didn’t cost an unreasonable amount, they, apple and sharp, would sell 10 of millions. Instead most people are buying dell’s monitors. If sharp doesn’t make dell’s monitors they should make that call, become that supplier.
    10 of millions, well, I’m looking to buy a great larger screen for my macbook pro. Maybe two.

  3. Apple buying a stake in a competitor would not sit well with current suppliers. Apple needs independent suppliers to complete against each other and not sink itself on one and antagonize the rest.

  4. Apple buys companies that add to its expertise. Whilst I like Sharp it sounds like their management is crap. They have had several years to get their act together.
    If Sharp had tech that set it apart then maybe. Problem is that the tech will be copied too quickly to make a purchase worthwhile.
    TMSC is a company that is up there in terms of cutting edge. Buying their foundry expertise may be interesting.
    Still why bother when Apple just picks the best manufacturer at the time to do their bidding.

  5. Hon Hai bought 10% of Sharp in March 2012 the Samsung made an investment (whatever) the following year. Don’t know how much

    Sharp’s implosion is probably because all the other junk (fridges toasters etc) the Chinese and Koreans can pump out a lot cheaper

    I seem to remember that Hon Hai and Samsung was in the Display division. Can’t see Apple getting into such a mess

  6. Apple doesn’t need to own a company making all sorts of tech/consumer junk.

    As with other investments – invest in a purpose built or designated current facility that you take control / ownership of if the company fails. That way you have the option to hire the otherwise redundant staff and rn the display business – or sell it on to one of your other suppliers to run on your behalf. ( I can’t believe Apple don’t already have some sort of guarantee in place already for any investment in facilities thy have made)

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