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Reply to "Sharp has Serious Money Problems!"

The share price of Sharp Corp. rose 9.13 percent to close at the day's high of 215 Japanese yen on the Tokyo Stock Exchange Tuesday.

The rally was seen as a positive response to Taipei-based Hon Hai Group Chairman and founder Terry Gou's announcement in Tokyo a day earlier that he is committed to finalizing an agreement to take a capital stake in the struggling Japanese electronics firm.

Speaking at a news conference for a Taiwanese trade delegation visiting Japan, Gou said the details of the acquisition pact, such as the timing and the amount his group plans to pay per share, have not yet been finalized.

He stressed, however, that both Sharp and Hon Hai will need to work hard to make the deal work.

Local economists and market analysts said the Hon Hai-Sharp partnership could be a historic adventure, given the significant differences between Taiwanese and Japanese business management models and corporate cultures.

According to them, Taiwan-Japan industrial cooperation is basically not easy. But historical momentum is pushing the two sides closer, they said, adding that the Taiwanese government, business community and ordinary people alike should not hesitate to cheer Gou for his adventurous move.

The following are excerpts from the local media coverage of the latest developments in the Hon Hai-Sharp partnership:

United Daily News:

Sharp is one of Japan's leading electronics companies, known for its advanced LCD panels, solar energy technology and environmentally friendly home appliances, but it, like the Japanese economy as a whole, is facing an unprecedented management crisis.

Its share price nosedived from around 900 yen in January 2011 to a 30-year-low of 164 yen Aug. 15 this year.

Chen Yung-feng, a Tunghai University professor and chief executive of the school's Japan research center, said Sharp, like many other famous Japanese companies, has the edge in brand recognition, manufacturing know-how and technological improvement ability.

The company, however, is also plagued by shortcomings common to other Japanese industrial giants -- high production costs, rigidity and closed-mindedness, Chen said.

Moreover, he added, the ownership of large Japanese companies tends to be separate from management, a trend that has made many of them lack decisiveness, acuity and promptness.

In contrast, he said, the founding families of major Taiwanese companies usually still play a critical role in corporate management and tend to be more decisive and responsive during emergencies.

Given these differences in operational styles, it has traditionally been difficult for Taiwanese and Japanese companies to cooperate, Chen went on.

The fact that high-tech companies in both countries face development bottlenecks, however, now offers a historic opportunity for them to forge partnerships, he said.

The Hon Hai-Sharp deal, if successful, will allow the two companies to expand their global market shares, taking advantage of their synergy, such as Sharp's technological strength and Hon Hai's acuity and brand recognition in the Chinese-speaking world, he added. (Aug. 29, 2012).

China Times:

Hon Hai and Sharp originally reached an agreement in March for the Taiwanese conglomerate -- the world's largest contract electronics maker -- to acquire a 9.871 percent stake in Sharp for about US$800 million, or 550 Japanese yen (US$7.01) per share.

When Sharp's share price plunged earlier this month to one-thid of the agreement's price, Hon Hai said in a statement that the price for its acquisition of the Sharp stake will be renegotiated.

Gou's current Japan visit is expected to clarify the situation, with both companies hoping to release a joint statement before the end of August.

Industry sources said the joint statement will not touch on the Hon Hai acquisition price.

The statement will instead focus on the two companies' consensus on expanding their future cooperation, especially in tapping the vast Chinese market where Hon Hai has huge production bases.

Their common goals will include selling 1 million Sharp-brand mobile phones annually in China, consolidating Sharp's share of China's big-screen LCD TV market and tapping into North America's lower-end LCD TV market, the sources said.

Moreover, the sources added, Apple Inc., Hon Hai and Sharp will collaborate to fight against South Korean dominance in the global smartphone and LCD markets. Hon Hai