Toshiba will sell its PC business to Sharp, according to a Reuters report, just two years after Foxconn acquired Sharp itself.
Toshiba Exits The PC Market
Toshiba was the first company to launch a notebook PC in 1985 and at one point was able to sell over 17 million PCs a year. However, as the PC market slowed down due to people spending their money on upgrading their smartphones instead of their computers, Toshiba’s sales have dropped to only 1.4 million units a year.
It hasn’t helped that Toshiba had to file bankruptcy for its nuclear power division, Westinghouse Electric, which lost $9 billion in nuclear reactor contracts. This has put pressure on Toshiba to sell other parts of its business, such as its memory and PC units.
Toshiba was able to sell the PC unit to Sharp for only $36 million, which hardly seems like enough to pay lawyers for the merger papers.
A New Beginning For The PC Unit
Sharp hopes to turn Toshiba’s PC business around by focusing on producing computers more cheaply by taking advantage of Foxconn’s manufacturing expertise. Sharp has already achieved some success in rejuvenating its failing TV business by using this strategy.
Foxconn’s leadership also seems to have brought more discipline to Sharp’s spending habits, which led to Sharp’s first profitable quarter after eight consecutive quarters of losses. This discipline may come in handy when Sharp attempts to rebuild Toshiba’s former PC unit. However, it’s not all been positive news at Sharp. The company also lost many executives and employees after the acquisition by Foxconn, and the same may happen at Toshiba’s former PC division as well.
Signaling confidence in its ability to rebuild Toshiba's former PC business, Sharp issued $1.8 billion in new shares to buy back preferred stock from banks. Sharp is expected to finish the acquisition on October 1.