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Friday, Nov. 2, 2012

Falling demand, prices take toll

Sharp widens loss forecast to ¥450 billion


Staff writer

Sharp Corp. announced Thursday its group net loss for the business year to March is expected to reach a record ¥450 billion due to shrinking demand for its main products.

The forecast is worse than the ¥376.08 billion group net loss Sharp logged last year and the projection it made in August for a ¥250 billion net loss this year.

"We should have taken much speedier steps to reduce the business risk when the business environment quickly changed," President Takashi Okuda told a news conference in Tokyo.

The struggling electronics maker had aggressively invested in liquid crystal displays and solar panels, only to see demand weaken and prices fall.

For the first half of the business year, its net loss grew 10 times larger from a year earlier to ¥387.58 billion, hurt by a severe business environment and additional restructuring costs.

The company posted a loss of ¥39.82 billion in the April-September period last year.

Okuda said Sharp's most important task is to produce an operating profit for the second half of this business year.

Its statement to the Tokyo Stock Exchange said it "is in circumstances in which material doubt about its assumed going concern is found," but it will take intensive measures to turn its fortunes around.

"We will conduct business structure reforms without sacred cows," Okuda said, adding that the company will announce a medium-term business plan by the end of March.

Sharp's dismal business forecast came a day after another electronics giant, Panasonic Corp., said its net loss for the business year will probably reach ¥765 billion, scrapping its May projection of ¥50 billion in net profit.

Sharp is trying to resort to cross-border capital alliances to improve its deteriorated financial health, but the fate of these deals remains unclear.

Capital tieup talks with Taiwan's Hon Hai Precision Industry Co., better known as Foxconn, appear stalled after Sharp's share price nose-dived earlier this year. Okuda said Thursday Sharp will continue to negotiate with Hon Hai but admitted he has not talked with Chairman Terry Gou since the end of August.

Meanwhile, Sharp is reportedly considering asking for investments from several U.S. companies, including Apple Inc., Google Inc., Microsoft Corp., Intel Corp. and Hewlett-Packard Co., when its business results start to improve.

Sharp would also like to form alliances with some of them for possible joint development of digital products and provide its small and medium-size Igzo power-saving LCD panels with enhanced picture quality for laptops, tablets and smartphones, according to a report.



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