Ailing Japanese tech giants in the spotlight

Sharp Electronics has reported a record annual loss of 545bn yen (£3.5bn) as it continues to struggle with falling sales and a high debt load. The figure represented a significant increase on the year before when Sharp reported a loss of 376bn yen. Fellow electronics giant Sony has also come under the spotlight, with a report that a leading US hedge fund is calling for it to be broken up.

Sharp, in which Samsung took a 3 per cent stake last year, narrowly avoided bankruptcy last year after receiving a $4bn emergency bailout from its Japanese banks.

The company, which expects to make a profit in the coming year, has cut over 10,000 jobs and is in the process of selling off a number of overseas assets and has reshuffled its management team. The companys current chairman, Mikio Katayama, is to step down and will be replaced by the current president Takashi Okuda.

According to a report in the New York Times the electronics giant Sony is facing a break-up attempt. The US hedge fund billionaire Daniel Loeb has amassed a 6.5% stake in the group and is calling for it to be broken up. Loeb appears to want Sony to spin off part of its entertainment arm, although Sony has said in response to these reports that its entertainment businesses were “not for sale”.

Loeb’s Hedge Fund – Third Point – is said to be interested in supporting an IPO of the group’s entertainment operations and is believed to be recommending that the company sell a 15%-20% stake in that business in an offering to existing shareholders.

Separately, it has also proposed that the company should consider selling off its 60% stake in Sony Financial, which sells life insurance policies and has real estate holdings. That would leave the core electronics arm, which includes Sony’s TV and PlayStation units and would help to generate funds to invest in the electronics business and allow the company to reduce its debt pile.

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