Shares of Sharp (OTC:
) and Panasonic (NYSE:
) traded lower on Thursday, as poor earnings have analysts
questioning their future within the tech industry. Although many
have blamed the companies' failures on the strong yen, their
problems run much deeper. For more than 10 years, Sharp has
employed a flawed business plan that included overpriced
TV ads and a dying perception of quality. While the company
repeatedly told consumers
that its screens were (for lack of a better word)
, the company failed to persevere above Sony (NYSE:
) and Samsung. Initially, competing sets were the same price but
looked much better. In more recent years, Sony, Samsung, Vizio
and LG have reduced their prices while simultaneously increasing
the quality of their televisions. Sharp has been unable to do the
Panasonic manufactures beautiful displays, but its business
model is also severely flawed. While other manufacturers
abandoned plasma TV production the moment LCDs became a viable
alternative, Panasonic continued to produce plasma displays. That
effort led to some interesting concepts, including a
, but it has not helped the company's bottom line. (Sharp is
famous for building a
, which was once the largest in the world. Perhaps bigger is not
Comparatively, Samsung and Vizio continue to grow their TV
businesses. You cannot walk into a bar in Metro Detroit without
seeing Vizio TVs hung from the ceiling. They are
. This is partially due to Vizio's pricing strategy; the company
has strived to undercut its competitors at every turn.
By charging as little as possible, Vizio displays have
proven to be attractive
to both consumers and small business owners.
Sony and Samsung are set to implement a different strategy.
The Wall Street Journal
reported that the two firms had implemented a new pricing policy
that will prevent retailers from discounting their TVs. This
could allow their competitors to undercut their prices more
easily through retail reductions.
Year-to-date, Panasonic is down more than 45 percent while
Sharp is down more than 70 percent. Sharp dropped more than 12
percent today after the company revealed that it expects to
report a full-year, record-breaking loss of $5.6 billion.
Panasonic hopes to save its TV business by
teaming up with Sony
to produce low-cost OLED displays. This initiative could be cut
short, however, now that Panasonic has decided to
scale back production
of new LCD TVs.
Sharp has yet to reveal any plans for how it might recover.
The company told
that it has "material doubt" that it can survive.
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