Samsung’s investment suggests ailing Sharp’s fortunes are looking less dire

March 6, 2013
March 6, 2013

Sharp, the long-struggling Japanese electronics maker, has raised some much-needed cash by selling a 3% stake to the much more successful South Korean company Samsung Electronics.

This is a nice moment in Asian business history. Relations between the Japanese and the Koreans are often frosty. And this marks the first investment in a Japanese electronics company by a Korean firm.

The Samsung tie-up may also help Sharp secure the South Korean firm as a customer, particularly in LCD TV sets. Samsung could also buy Sharp screens for its tablet computers.

Otherwise, the cash injection, worth ¥10.3 billion yen ($110 million) is not an amount of money that will provide a major boost to Sharp’s fortunes. It is also not a new strategy for Samsung to court outside investment. The company negotiated a 10% stake sale to Taiwanese Foxconn owner Hon Hai last year, though that deal was delayed and seems to have fallen through.

But the Samsung deal is a strong signal that Sharp is becoming more attractive to investors. Its fortunes could be reversing thanks to new Japanese prime minister Shinzo Abe’s efforts to weaken the yen. Sharp posted a small quarterly operating profit of ¥2.6 billion ($28.5 million) in its third quarter, after losing ¥169 billion in the first six months of its financial year. Its latest earnings were boosted by the depressed yen, which is lowering the cost of the products it sells overseas.

Top News

Powered by WordPress.com VIP
Follow

Get every new post delivered to your Inbox.

Join 24,445 other followers