Apple bailed out Sharp to the tune of $2bn last quarter: analyst

Apple bailed out Sharp to the tune of $2bn last quarter: analyst

Summary: Did Apple, in its desire to distance itself from Samsung, pay out billions to Sharp so the company could survive long enough to deliver screens so vital for the iPhone 5?

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Television and display maker Sharp is in serious trouble, with crushed profits and huge losses hanging around the company's neck like a lead weight. But one analyst suggests that Apple used its massive cash pile to make sure the company survived to deliver parts for the new iPhone 5.

Apple and Sharp have been thrown together thanks to the ongoing legal feud between Apple and Samsung. Apple, wanting to lessen its reliance on Samsung, turned to Sharp for displays for its new iPhone. But huge problems at the company had put the delivery of these screens in jeopardy.

Enter Apple and its massive $100 billion plus cash pile.

Asymco analyst Horace Dediu suggests that Apple may just have pushed over $2 billion to Sharp during the last quarter to ensure that the supplier survived. Digging through the financial data, Dediu points to expenditures at Apple that were over $2.3 billion higher than forecast. Dediu also found that Apple paid for some of its acquisitions "through uncharacteristic or unorthodox means."

Apple put the spending down to "product tooling, manufacturing process equipment, and infrastructure," but Dediu's theory is that at least some of that money went to Sharp.

He noted:

Circumstantial evidence points to the asset being production equipment (or even a whole plant) previously owned by Sharp," Dediu said. "Sharp is a key supplier of screens to Apple but is also in financial distress. Sharp has also been the object of an intended investment by Foxconn [Hon Hai]. That deal fell through as Sharp's finances deteriorated. My guess is that these attempts to shore up Sharp are directed by Apple to ensure both continuity of supply and a balanced supplier base (offsetting Samsung, another supplier).

Dediu points out that if Sharp had entered into bankruptcy, it's quite possible that its production plants could be grabbed by creditors and shut down, irrespective of any deal with Apple. If this had happened it could have resulted in the iPhone 5 being delayed, something Apple would have wanted to avoid at all costs.

How Apple makes products difficult -- and expensive -- to repair

Image source: Apple.

Topics: Apple, Hardware, iPhone, Smartphones

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36 comments
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  • Smart

    Smart business move IMO. Anything Apple does to reduce the reliance on Samesung for components is the way to go!
    jamboy34
    • Dumb

      Go Kill yourself jamboy34. APPL make badly built disposable tech for dumasses with more money than brains.
      Booster Gold
      • Fanatical much?

        Wow, you fanboys are fanatical. I guess you android fanboys just start foaming at the mouth and throw common decency out the window whenever anyone says something negative about your cult leaders Samsung or Google. Typical comment you see from android fans these days. You guys degenerate every comment section into a simplistic and steady stream of insults every time.
        Murdoxin
        • Yeah because

          all m/soft and apple fanboys are calm and balanced individuals. Just like yourself, clearly with no axe to grind.
          Little Old Man
        • you what...

          I dont believe my Samsung 52" LCD telly runs Android; I dont believe my sons 26" monitor runs Android, nor the kids DVD player. Yes his Galaxy mini does. I like Apple kit but hate the company ethos. I love Samsung and most tech that delivers something to me. Personally I'd be more than happy to see Samsung stick their middle finger to Apple as they are the butt of so many unreal jibes.

          And so what if there was any truth in 'reverse engineering'. What would anyone with a brain expect. If you want to shift production to a cheaper area of the world then of course they will learn, and evolve, and overtake you. It's common sense and that's why the great American dream is screwed, Screwed by the short term financial reward that effectively turns on itself and reduces the amount of money in the economy. Then Apple blame everyone but themselves. Hey... If they couldn't see this coming maybe they should be out looking for work like so many Americans are now.

          IOS is great; Android is great; windows surface will be great; can't comment on Playbook OS etc BUT theres room in the world for them all. One day we might even see apps for PCs (that includes Linux, Mac, etc in my book. A PC is a PC regardless of what shit it runs) and the end of all those spurious corruptions etc. Lets hope we can all benefit and live happily in our own OS and all benefit from the new phase we're in.
          johnmckay
      • well that escalated quickly.

        .
        Jean-Pierre-
      • Speaking of "dumasses with more money than brains."

        It's spelled "dumbasses", dumbass.
        matthew_maurice
      • Ohh - I want to join the Booster Gold Fan Club after that one!

        Yeah, right. The haters are up early, today
        William Farrel
      • Envy is never providing good advice

        Envious much that there are apparently plenty of people willing and able to afford an iPhone?
        danbi
        • huh??

          What is with these kinds of comments??? It is as bad as GOP followers that think there are no rich DEMs. I could go into the local Apple store and buy it out. I don't find Apple products interesting. I don't like their business practices. I don't like the fact that they don't pay their fair share of taxes. I've felt this way since working with the first low res 72dpi black and white Mac and printer next to a full color Compaq with 300 dpi printing. Amazing how Apple's performance went up when their PCs went to the current intel chips, after years of lying about the superior performance of their more proprietary offering.
          mswift@...
      • Idiot

        Why not do us all a favor and unplu from the internet Booster Gold... hmmm naming yourself after a 3rd string hero does say something - along with the fanaticism you display it shows you are likely a rather corpulent, pasty, zit-faced 40+ virgin still living in his mother's basement.

        But okay here's something for you to chew on: Go check eBay and see how much iPhones are going for - all models. And check the prices and sales of comperable Android based devices on eBay. Love them or hate them Apple devices still fetch a premium on eBay which means they are less likely to be found in a landfill - not quite as "disposable" as you like to think.
        athynz
        • Its a great model I wish others would harness...

          There's just far too much clutter and models from every other company and the Apple line is a fantastic example of what could and should be delivered. A simpler line that can be supported properly. One day they'll last more than a day on a batteryand I might swap my BB Torch but can't see it. My 4 sits in my bag for testing purposes.

          But I think you'll fine the overall cost of ownership presents a different picture. You will get more back but you WILL spend more during the course. The total costs are likely to be almost similar so I would personally just go for what you want. Each has it's benefits andevryone has their own preference. The Apple kit is robust and tied down so certainly suits non technical folk and you could recomend it to your granny. On the other hand the Android tablets for instance tend to have slots for sd/usb and are more readily usable with mice... that can be still handy, especially if you're streaming or connecting via RDP etc.

          I'm really saying 'Value' cant simply be measured in terms of cost to buy, and second hand value. That's simply one cost, rather than the whole picture.
          johnmckay
      • Insane

        The use of Android clearly drives people insane!
        jamboy34
    • Not

      Not a very smart or objective comment. Sure you don't wanna change your name to fanboy34? ;-)
      olga.mavicz
      • Why?

        Part of apple relying on part of samsung, while other parts are at war, increases risk in the supply chain. Over-reliance on suppliers can and will cause problems IF the relationship deteriorates.

        As for "APPL make badly built disposable tech for dumasses" that's just being silly. istuff has issues but ibricks are still superior to 90% of android offerings and islabs probably a similar number.
        Little Old Man
        • Not so

          Apple is a monolithic company, while what you know as "Samsung" is a bunch of companies with common ownership. Not comparable in any way.

          So it is Apple, who sources components from one Samsung owned company and Apple who is suing another Samsung owned company for a number of infringements on patents and designs.

          Samsung tried to play a tricky game, where they attempted to have good relationship where Apple was giving them tons of money. It was of course inevitable that relationship will break, as I am confident Samsung copied component designs as well.
          danbi
          • Not so?

            Sorry, your argument is bogus. Not comparable to what? You're trying to tell us that companies under common ownership are completely autonomous and share no common leadership direction? Stretching - much? Unless of course you're high up in the samsung management structure and can testify that there is no corporate governance whatsoever. Nope, thought not.
            Here we go with the copying comments again - like apple would never lose 1/3 billion dollars for ripping off someone else's tech?? Of course apple can do no wrong in danbiland.
            Little Old Man
          • As much as I usually don't agree with Little Old Man

            In this case I have ask what the difference really is? What difference does it make that Apple is a monolithic company compared to Samsung's many divisions?
            athynz
          • Nobody 'gives' anyone money.

            They buy products and services. Apple were obviously still getting a 'good deal' or they would have dumped Samsung. Samsung must have been happy to some extent too (probably factored in the patent risks or they'd have told them to get stuffed). It'll be interesting to see who's most happy in 6 months cos those screens are going to be a bit dearer, and a bit bigger margin if Sharp go bust! Sharp has always been seen as the low end of technology in the UK (the equivalent of Amstrad if you like) and it does seem an odd pairing to me. LOL maybe Amstrad will be their next strategic supplier.
            johnmckay
          • Sharp's electronics business

            has been all over the map for decades. Cheap TVs, expensive TVs, cheap boomboxes, top of the line PDAs etc. However, Sharp was producing extremely high quality LCDs in Japan long before Samsung even had the tooling to make their own.

            If Sharp can survive long enough, I have no doubt they'd produce better quality panels than either Samsung or LG. The LG panels in the MBP Retinas have serious image retention problems, whilst the alternate Samsung panel in my MBP Retina doesn't suffer from IR, but isn't as vivid as the LG ones are.
            Playdrv4me