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Sharp's financial struggles place Foxconn investment in doubt

post #1 of 12
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Shares of display maker and Apple supplier Sharp have plummeted so far that Foxconn's deal to buy a stake in the struggling Japanese company could be in peril.

In the last five months, Sharp's stock price has dropped by 70 percent, marking new 40-year lows. That's prompted an effort by Hon Hai Precision, parent company of Apple's device assembly partner Foxconn, to renegotiate its deal to buy a significant stake in Sharp, according to The Wall Street Journal.

It was first announced in March that Foxconn planned to buy a 10 percent, $808 million stake in Sharp's money losing LCD business. The deal prompted speculation that the two companies were aligning to secure more of Apple's business.

It was even said in June that Foxconn was contemplating buying an even greater stake in Sharp after a recent steep fall in the LCD maker's share price.

But now, Sharp's shares have apparently fallen so much that Foxconn wants to renegotiate its original deal. Foxconn's initial deal was based on a Sharp share price of 550 yen, or $6.93, but since then Sharp's stock has fallen to just 175 yen.

Now, according to the Journal, Foxconn is expected to hold out for the best deal it can from Sharp. The electronic device assembler could also wait to buy Sharp outright at a bargain price if the company can't turn its fortunes around.

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Despite its struggles, Sharp did announce via its president earlier this month that it will ship screens for Apple's next iPhone, expected to be unveiled at a media event on Sept. 12. The next iPhone is expected to feature in-cell touch panel technology that will allow the touchscreen to become even thinner, allowing for a thinner overall design or more space for components like the battery.

Sharp has also been rumored since late last year to provide its own LCD display technology known as IGZO, or indium gallium zinc oxide, for Apple's portable devices. However, earlier this year it was said that sharp's IGZO technology didn't meet Apple's standards for its third-generation iPad with Retina display.
post #2 of 12

Great alternative to Samsung as a supplier.  Apple must be feeling slightly concerned about stability of supply.
 

post #3 of 12

If Sharp has the manufacturing process worked out and can get acceptable yields, Apple could prime the pump by paying in advance for production and/or  investing in the manufacturing lines -- as they have done with others.

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post #4 of 12

If the technology is that important to Apple, they should just buy Sharp's LCD Division, sell off manufacturing and keep engineering and R&D. They could pump a lot of money into R&D while letting another company worry about materials, equipment and yields.

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Disclaimer: The things I say are merely my own personal opinion and may or may not be based on facts. At certain points in any discussion, sarcasm may ensue.
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post #5 of 12

Maybe Apple should just buy all of Sharp's LCD unit, including manufacturing.  Then they'd be in control and could set the standards for operating the company.  Slice Samesung entirely out of the LCD supply chain.

post #6 of 12

If the price is now cheaper, then Foxconn should buy a larger share of Sharp.

 

The title of this article is misleading. If Sharp is cheaper now then it is even easier for Foxconn to pay for a larger share.

post #7 of 12
Quote:
Originally Posted by cnocbui View Post

Great alternative to Samsung as a supplier.  Apple must be feeling slightly concerned about stability of supply.
 


This could be why the calls for Apple to dump Samsung as a supplier are not well thought out.

post #8 of 12

Who'd have ever guessed that Sharp would fall on hard times. I guess I better move my investments from Sharp to RIM. 

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post #9 of 12
Quote:
Originally Posted by Dick Applebaum View Post

If Sharp has the manufacturing process worked out and can get acceptable yields, Apple could prime the pump by paying in advance for production and/or  investing in the manufacturing lines -- as they have done with others.

Someone always says this. We all know Apple can fund/back their choice of projects. What makes you think this is likely? It's not like Sharp will disappear.

 

Quote:
Originally Posted by Harbinger View Post


This could be why the calls for Apple to dump Samsung as a supplier are not well thought out.


Those are mostly people who lack critical thinking skills. Making business decisions based on spite isn't a great idea. I've mentioned this before, but Samsung and LG have really edged a lot of the others out of the display panel market. I recall some interesting things from Sharp, but I haven't paid much attention to them the past couple years. In terms of competition, Samsung has always marketed phones. That was a known factor.

post #10 of 12
Quote:
Originally Posted by peter236 View Post

If the price is now cheaper, then Foxconn should buy a larger share of Sharp.

 

The title of this article is misleading. If Sharp is cheaper now then it is even easier for Foxconn to pay for a larger share.

 

I'm glad I'm not speculating on what Sharp, Foxconn, and Apple do with their money. 

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post #11 of 12
Quote:
Originally Posted by peter236 View Post

If the price is now cheaper, then Foxconn should buy a larger share of Sharp.

The title of this article is misleading. If Sharp is cheaper now then it is even easier for Foxconn to pay for a larger share.

I don't think you get it... Investing corporate monies into another company is often done to either ensure preferable supply/access to components .. Or .. To aid the company/supplier with a pseudo-loan to help them over some hard financial times.

The problem is since the time you looked into making such an investment and now you learn the financial difficulties are MUCH greater than you were led to believe so much so that you have to wonder if your not throwing good money after bad.
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post #12 of 12

Which means for the same amount of money Foxconn could have bought 30% of Sharp's Stock with money left.

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