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Sharp Finds Knight In Shining Armour

Intel injects much needed cash into the electronic giant.

Sharp, the struggling Japanese consumer electronics giant, has been in trouble recently with its credit rating being downgraded to 'junk' status by top ratings agency Standard and Poor’s and with that it had issued a survival warning as it forecast a major loss of £3.5bn to March 2013 which makes THQ's losses look like pocket change.

Sharp, as their slogan goes, are ‘Big in Japan’ with the majority of their sales coming from the small Asian island and so have struggled along with Japan itself throughout the financial crisis and, to myself, looked like it was going to be another company that was a victim of the recession.

Fortunately for Sharp a knight in white armour appeared in the nick of time to fight off the lingering demons (or just give it a much needed cash injection). Who might this knight be you may ask, well if you have not read the title, it's US chip manufacturer Intel. In a move that I don’t think anyone might have seen, Intel could inject as much as £315m into Sharp.

Sharp's shares have fallen nearly 70% on the news of their losses and the down grading of their credit rating to 'junk' status. Analysts say that Sharp need to raise more capital and quickly if they are to survive. Gerhard Fasol of Eurotechnology Japan commented "They are desperate to raise funds as they have a huge cash flow problem right now,” with Intel’s promised cash injection Sharps stock rose 9% but nowhere near enough.

Sharp have a massive base in the UK with their European HQ, not only that but a large manufacturing base here, where many workers make electronics destined for Europe means the collapse of Sharp would create huge redundancies.