Wed, Mar 30, 2016 - Page 15 News List

Sharp shares fall after report on wider losses

WEAKER DEMAND:The firm blamed its deeper-than-expected losses on a drop in demand in China. There are worries about ‘dilution’ after the buyout


Sharp Corp shares fell as much as 6.1 percent after the Nikkei newspaper reported that the electronics manufacturer might post a wider loss for the current fiscal year than analysts had anticipated.

Sharp is in the final stages of negotiations with Hon Hai Precision Industry Co (鴻海精密), which is seeking to acquire the maker of Aquos TVs after years of wrangling.

The Osaka-based company is on track to post an operating loss of ¥90 billion (US$791.9 million) and a net loss of ¥200 billion for fiscal 2015, which ends tomorrow, the Japanese newspaper said.

Sharp last week said that full-year earnings probably missed forecasts because of a deterioration in demand in China.

Sharp and Hon Hai, known as Foxconn Technology Group (富士康) outside Taiwan, have reached broad agreement on an acquisition plan, and directors of both companies are to vote on it today, the Nikkei reported.

“The report of annual losses is having some impact, but there is also the issue of dilution, on which there is very little clarity,” Tokyo-based Ace Research Institute analyst Hideki Yasuda said, referring to the amount of shares that Sharp might issue as part of the Hon Hai deal. “It will take some time after completion of the deal and Sharp earnings showing actual improvement. It’s probably short-term, individual investors that are moving the shares now.”

Sharp shares closed 0.8 percent lower at ¥130 in Tokyo yesterday, after earlier declining to a low of ¥123. The Nikkei 225 Stock Average slipped 0.2 percent.

Sharp is projected to post an operating loss of ¥24 billion and net loss of ¥114 billion, according to the average of analysts’ estimates compiled by Bloomberg.

Hon Hai on Sunday said it would hold a board meeting today as scheduled, where it might discuss the Sharp deal depending on the stage of negotiations, while Sharp on Monday said it aims to reach the agreement as soon as possible.

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