Sharp 2009 Annual Report Download - page 34

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strategic or other business issues arise, or objectives
change, it may become difficult to maintain such alliances
and collaborative ties with these companies, or to gener-
ate adequate results. In such cases, Sharp’s business
results and financial position may be impacted.
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Sharp procures materials and receives services from a
large number of business partners, and transactions are
made only once a detailed credit check of the company
has been completed. However, there is a risk that busi-
ness partners may suffer deterioration in performance due
to slumping demand or severe price erosion, or face an
unexpected M&A, or be impacted by natural disasters or
accidents, or procure materials of insufficient quality, or
become involved in a corporate scandal including a breach
of the law–any of which may affect Sharp’s business
results and financial position.
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New technologies are emerging rapidly in the markets
where Sharp operates. Resultant changes in social infrastruc-
ture, intensified market competition, changes in technology
standards, or the appearance of substitute technologies may
impact Sharp’s business results and financial position.
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Sharp strives to protect its proprietary technologies by
acquiring patents, trademarks, and other intellectual property
rights in Japan and in other countries, and by concluding
contracts with other companies. However, there is a risk that
rights may not be granted, or a third party may demand inval-
idation of an application, such that Sharp may be unable to
obtain sufficient legal protection of its proprietary technolo-
gies. In addition, intellectual property that Sharp holds may
not result in a superior competitive advantage, or Sharp may
not be able to make effective use of such intellectual prop-
erty, such as when a third party infringes on the intellectual
property rights of Sharp. There may also be instances where
a third party launches litigation against Sharp, claiming
infringement of intellectual property rights. Resolution of
such cases may place a significant financial burden on Sharp.
Furthermore, if such a third-party claim against Sharp
Listed below are the principal business risks of Sharp that
may have a significant influence on investors’ decisions.
Note that in addition to these, there exist certain other
risks that are difficult to foresee. Each of these risks has
the potential to impact the operations, business results
and financial position of Sharp. All references to possible
future developments in the following text were made by
Sharp as of March 31, 2009.
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Sharp manufactures and sells products and services in differ-
ent regions around the world. Business results and financial
position are thus subject to economic and consumer trends
(especially trends in private consumption and corporate capi-
tal investment), competition with other companies, product
demand, raw material supply and price fluctuations in each
region. The political and economic situation in respective
areas may also exert an influence on business results and
financial position. The deepening of the global financial crisis
has brought a rapid deterioration in the economic environ-
ment. In response to this situation, Sharp announced out-
lines of its measures to improve business performance on
February 6, 2009, on the premise that difficult business con-
ditions were set to continue for some time. However, there
is a risk that, in the event of an unexpected change in the
management and business environment or some other
factor, these measures may not proceed as anticipated, or
may not result in the anticipated outcomes.
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The proportion of consolidated net sales accounted for by
overseas sales stood at 51.2% in fiscal 2006, 53.5% in
fiscal 2007 and 54.3% in fiscal 2008. Although Sharp
employs forward exchange contracts to hedge the risk of
exchange rate fluctuations while simultaneously seeking
to expand and strengthen overseas production, such fluc-
tuations may affect Sharp’s business results.
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Sharp implements strategic alliances and collaborations
with other companies in respective business fields to
bolster the development of new technologies and prod-
ucts, and to enhance competitiveness. If, however, any
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