Sharp: screen test

Sometimes the best course of action is to do nothing. In the case of Sharp this is untrue. And true at the same time.

Sharp needs to do something. Its liquid crystal display businesses (screen modules for iPads, for instance, as well as finished TVs) account for half of sales. In two out of the past three years these divisions have lost money.

To stay competitive, these products need investment: Japan Display (created from LCD units discarded by Hitachi, Toshiba and Sony) is to spend $1.4bn to build a new factory. Sharp, which chose to go it alone, has net debt of three times equity and cannot afford to match this.

On Monday, Sharp said its creditors might convert their debt to preferred shares as part of a bailout plan - the second in less than three years. But Sharp's business should come first, its capital structure second. Must the LCD business go? Until that is decided, nothing else should be done.

Email the Lex team at [email protected]

© The Financial Times Limited 2015. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation