A second bailout in three years will give Japanese electronics conglomerate Sharp some breathing space, but analysts warn the company may not be out of the woods just yet.
"It's going to be very difficult for them to survive in five years," Tradewinds managing director Peter Boardman told CNBC. And the failure to reinvent itself "will wipe out equity investors," he said.
Beleaguered Sharp has stumbled from one crisis after another for the past four years, as cut throat competition wiped out profits at its core business of the day, from televisions to liquid crystal display (LCD) panels for mobile devices.
On Thursday, its creditor banks again pulled the company back from the brink of insolvency, but the accompanying restructuring plan offered few signs that Sharp has learnt any lessons from its on-going crisis.
Investors were not impressed and dumped the stock. Its share price fell 8.50 percent in morning trade on Friday, and the stock has lost nearly 70 percent of its value after posting three annual losses in four years.
"Sharp is beyond a fix," Jefferies analyst Atul Goyal said in a note on Thursday. "If Sharp does not turn around, losses will mount and equity value will be almost zero," he said.
So long, common stock
The latest bailout will buy the company some time, but will be painful for shareholders.
The 200 billion yen ($1.68 billion) rescue package will take the form of a preferred share issuance to its main banks, Mitsubishi UFJ and Mizuho, and heavily dilute existing shareholders – by up to 139.4 percent, according to Jefferies' Goyal.