Sharp has been struggling in the market for some time now. Since the past few years, Sharp’s sales have declined and the company’s prospects were not looking good. However, last week, Samsung came to the rescue of this famous Japanese company and it is reported that Samsung has invested over $112 (10 billion yen) million in Sharp. This makes Samsung, the fifth largest shareholder in the company with a 3 percent stake.
The deal seems to have saved the Japanese company for now; however, Japanese bloggers and social media users are not quite happy with the way things are going. While some have rationally analyzed the benefits and the problems with this deal, most others have criticized Sharp and have said that the company is betraying their motherland. Well, we can’t say this as the general opinion of the public, but atleast a part of the country is upset over the deal. Japan used to be pioneer in consumer electronics during the 1970s, 1980s period with Sony and Sharp ruling the market; however since the 1990s we have seen the company lose its popularity. Companies like Samsung, Apple have dominated the consumer electronics market since then and their prominence in the global market declined. Still, we find many Japanese customers depended on Sharp, as their first choice for a TV set is not Samsung or LG, its Sharp.
The deal between the two companies would help the debt ridden Sharp convince their lenders that its prospects are quite solid and they will record stable growth in the coming months. After the deal went public, their official twitter account tweeted, “I think I understand that there are many people who feel that one of the reasons or bases for supporting (Sharp) has been lost.”
However, Samsung stressed on the fact that they won’t interfere in the company’s management in any form. The deal would give them a steady supply of LCD panels for their displays and smart phones. Samsung could also get an idea of the future products and customers of Sharp and can have access to the cutting edge technology of the company. They may even influence future product lineup of Sharp. Other than this, they won’t interfere in the regular business dealings of the company.
There may be yet another implication of this deal. Apple replies on Sharp for one third of their LCD panel supply and analysts predict that the deal with its rival Samsung may be troublesome for the company in the future. Any problems with Sharp can even delay the launch of Apple device. But we can’t say that this will indeed be the case as the Susquehanna analyst Mehdi Hosseini says “It’s not like Samsung is going to write a memo to Sharp to have unfavorable terms with Apple but they could influence Sharp or indirectly influence Sharp’s relationship with Apple…and it gives them better market intelligence on their competitor and is a way of putting more pressure on Apple.”
Hence we would have to wait and see the actual implications of this deal for Sharp as well as Apple.