Japan’s Sharp sees third loss in four years as smartphone display sales sag
A pedestrian walks past a logo of Sharp Corp at a train station in Tokyo February 3, 2014.
Credit: Reuters/Yuya Shino
TOKYO (Reuters) – Japanese electronics supplier Sharp Corp warned it will slip into its third annual net loss in four years as fierce pricing competition saps sales of smartphone displays, the business line it had been counting on for growth.
Reporting it reversed into a net loss for the quarter ended December, Sharp said on Tuesday it will rethink strategy as it expects to book a net loss of 30 billion yen ($256 million) this fiscal year, compared with the 30 billion net profit it previously forecast. Analysts surveyed by Thomson Reuters had expected a full-year net profit of 22.4 billion yen.
Japanese technology firms like Sharp and Sony Corp have together lost billions of dollars in recent years as aggressive, cash-rich competitors like South Korea’s Samsung Electronics Co and China’s Huawei Technologies Co poached customers with keen pricing.
Investors had hoped that by increasing sales to Chinese smartphone makers like Xiaomi Technology Co Ltd [XTC.UL], Sharp could reduce its dependence on Apple’s iPhone and ensure higher margins. But Sharp warned two weeks ago that it would likely miss its targets, and the loss means the company will fail to meet an earlier pledge to its creditors to remain profitable this year.
“I believe it is my responsibility to compile a new business plan as soon as possible,” Chief Executive Officer Kozo Takahashi told reporters at a briefing in Tokyo. He said Sharp will unveil a new business plan for the 2015-2017 fiscal years around May.
He said the company expanded its customer base in China to around 15 smartphone makers, but that the number of devices sold was weaker than expected. “We’re seeing a glut in smartphones,” he said, adding that it would take until the middle of the year to correct the over-supply situation.
In recent years, Sharp has cut thousands of jobs and exited unprofitable operations such as solar panel production in Europe. It also received a $4.4 billion bailout from its banks, issued new shares and took in equity investments from Samsung and Qualcomm Inc.
Analysts have said the company may come under pressure to sell off more assets or shut down plants in a bid to restore profitability and appease creditors.
Separately on Tuesday Sharp said it agreed to sell Recurrent Energy LLC, a North American solar energy business, to Canadian Solar Inc for $265 million. Sharp said the impact of the deal, and an associated holding company transaction, on its consolidated financial accounts for the current fiscal year “is estimated to be immaterial”.
($1 = 116.9400 yen)
(Editing by Kenneth Maxwell)