Thu, Feb 02, 2012 - Page 10 News List

Sharp eyes loss of US$3.8bn on LCD TVs, tax write-off

Bloomberg

Sharp Corp, maker of the Aquos-brand television model, forecast its worst annual loss since it was founded in 1912 on slumping prices of LCD TVs, an economic slowdown and a tax write-off.

The net loss in the year ending March 31 could be ¥290 billion (US$3.8 billion), the company said in a statement yesterday, reversing an earlier forecast for a profit of ¥6 billion. That compares with the average ¥16.2 billion loss from 24 analysts’ estimates compiled by Bloomberg. Sharp cut its revenue forecast by 8.9 percent and said operating profit would be zero.

Japan’s largest maker of LCDs will write off ¥119.8 billion in deferred tax assets in the year to next month. The Osaka-based company and local rivals Sony Corp and Panasonic Corp are also forecasting losses because of weakening demand for TVs, while a stronger yen damps the repatriated value of their overseas sales of LCDs, mobile phones and solar cells.

“TV and LCD panel inventory may further pressure earnings in the fourth-quarter,” Takashi Watanabe, a Tokyo-based analyst for Goldman Sachs Group Inc said before the announcement.

Losses related to inventory correction as well as Sharp’s declining market share in the smartphone market may also hurt the company’s earnings, said the analyst, who has a “neutral” rating on the stock.

A loss this year will be the first in three years.

Sharp said it would halve the output at its largest TV panel factory in Sakai city, Osaka Prefecture.

Global liquid-crystal display TV shipments probably gained 8 percent to 206 million units last year, falling short of an earlier projection of 211 million units, according to DisplaySearch. The shipments rose 13 percent in the quarter that ended on Dec. 31 from a year earlier, according to the researcher, which estimates annual shipments will rise 10 percent this year.

In April last year, Sharp reduced production of TV panels at its two biggest LCD plants. The company’s so-called 10th--generation factory in Sakai has a production capacity of 72,000 panels a month, while the eighth-generation LCD plant in Kameyama, Mie Prefecture, is capable of making 100,000 panels.

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