Arrogant Sharp did not see the writing on the wall

 F1.largeSharp is paying the price for getting far too cocky, depending on its technological superiority and not seeing the writing on the wall.

In 2014, the company’s bottom line was red and hurting like one of Jimmy Edwards’ students and yet for some reason the outfit was smug.  It had just signed a big contract with Chinese smartphone maker Xiaomi.

Within months, however, Sharp found it was sharing Xiaomi revenue as upstart rival Japan Display also struck a deal to supply the Chinese outfit.

Sharp, confident in its technological superiority, found itself completely blindsided by rivals. For example it could not get its customers to pay a premium for its high-end “IGZO” display technology, which features high resolution and low energy consumption.

Sharp was snubbed by Apple in favour of  LG Display and Japan Display, not be because it had weak technology, but because Apple was worried about Sharp’s prospects.

Critics say Sharp often over-estimated its market position, became complacent and over-invested in manufacturing capacity as liquid crystal display (LCD) prices were tumbling.

Sharp announced its second major bail-out in three years, with main lenders Mizuho Bank and Bank of Tokyo-Mitsubishi UFJ injecting a combined $1.7 billion in a debt-for-equity swap.

CEO Kozo Takahashi acknowledged Sharp had often been slow to pick up on changes. “If we hadn’t made mistakes, we wouldn’t be here,” he said at a news conference. “Our governance and management was weak in terms of catching on to change and reacting as a company.”

But he also put some blame on a “rapid deterioration” in the market, and shrugged off calls to consider spinning off the display business.

On Friday, shares in Sharp fell more than 10 percent to their lowest since December 2012. The stock has fallen by around 85 percent in the past 5 years.

Analysts say a merger with Japan Display would make sense, but Sharp has refused because they consider the outfit a lesser player.

Sharp’s decline at Sharp can be traced back to a decade ago, according to some industry experts, when the company spent hundreds of billions to expand its LCD manufacturing facilities in Kameyama, a rural city in central Japan just as the bottom dropped out of the market.