Foxconn Technology Group (富士康科技集團), manufacturer of Apple Inc iPads, plans to renegotiate the price of its investment in Sharp Corp after the Japanese television maker widened its loss forecast and its shares fell the most since 1974.
“We plan to discuss the investment again, but for sure it won’t be at the original ￥550 per share,” Simon Hsing (邢治平), a spokesman for Hon Hai Precision Industry Co (鴻海精密), the Taipei-based flagship firm of Foxconn, said yesterday. “Sharp has agreed to us taking at least the same size of stake, with the possibility of an even larger stake.”
Hon Hai, the world’s largest contract manufacturer of electronics, intends to continue with the investment, Hsing said. Foxconn group companies will no longer recognize the NT$6.4 billion (US$214 million) write-off they made last quarter because of Sharp’s share price decline, Hsing said.
Taiwanese tycoon Terry Gou (郭台銘) and his group agreed in March to invest ￥133 billion (US$1.7 billion) to rescue Sharp, the company that reported a ￥138 billion quarterly loss yesterday. The investment in Japan’s biggest liquid crystal display maker may help Foxconn guarantee access to technology for mobile phone and TV panels.
Sharp shares plunged 28 percent to ￥192 in Tokyo trading yesterday after forecasting an annual loss of ￥250 billion. That is more than its market capitalization of ￥213 billion after the stock’s biggest slump in more than three decades.
The decline could prompt Hon Hai to write off NT$6.1 billion and Foxconn Technology Co (鴻準) NT$3.1 billion this quarter, based on the original investment plan, according to estimates by Vincent Chen (陳豊豐), an analyst at Yuanta Securities Co (元大證券) in Taipei.
Sharp’s convertible bonds due September next year dropped to 87 percent of the notes’ face value.
“It’s disastrous for Sharp,” said Amir Anvarzadeh, manager for Asia equity sales at BGC. “Hon Hai has to increase its stake in Sharp to keep it alive. Or they could turn around and write it off.”
There is no fixed timeline for when a new price will be agreed and the original transaction has not been completed, Hsing said. Foxconn intends to proceed with its technology cooperation and taking an equity stake, he said.
Foxconn, a computer-casing maker, and its affiliates agreed to buy a 9.9 stake in Sharp. Gou invested ￥66 billion for a 37.6 percent stake in Sakai Display Products Corp, formerly known as Sharp Display and using the LCD industry’s most advanced technology.
Last month, the cost to insure Sharp’s debt against default in the short term outstripped that for the longer term for the first time, a sign that investors have concerns over the company’s ability to repay debt.
The two-year contracts on Japan’s largest maker of LCDs jumped 453.7 basis points since June to 941.9 basis points, while the five-year cost rose 295 to 897.7, according to CMA prices as of Thursday.
Sharp had a net loss of ￥138.4 billion in the three months ended June 30, widening from ￥49.3 billion a year earlier, the company said. The average of four analysts’ estimates compiled by Bloomberg was a loss of ￥76 billion.
The extra yield investors demand to own convertible bonds instead of government debt soared 489.4 basis points to a record 1,243.6 basis points, prices from the Tokyo Stock Exchange yesterday morning showed.
STILL HOPEFUL: Delayed payment of NT$5.35 billion from an Indian server client sent its earnings plunging last year, but the firm expects a gradual pickup ahead Asustek Computer Inc (華碩), the world’s No. 5 PC vendor, yesterday reported an 87 percent slump in net profit for last year, dragged by a massive overdue payment from an Indian cloud service provider. The Indian customer has delayed payment totaling NT$5.35 billion (US$162.7 million), Asustek chief financial officer Nick Wu (吳長榮) told an online earnings conference. Asustek shipped servers to India between April and June last year. The customer told Asustek that it is launching multiple fundraising projects and expected to repay the debt in the short term, Wu said. The Indian customer accounted for less than 10 percent to Asustek’s
‘DECENT RESULTS’: The company said it is confident thanks to an improving world economy and uptakes in new wireless and AI technologies, despite US uncertainty Pegatron Corp (和碩) yesterday said it plans to build a new server manufacturing factory in the US this year to address US President Donald Trump’s new tariff policy. That would be the second server production base for Pegatron in addition to the existing facilities in Taoyuan, the iPhone assembler said. Servers are one of the new businesses Pegatron has explored in recent years to develop a more balanced product lineup. “We aim to provide our services from a location in the vicinity of our customers,” Pegatron president and chief executive officer Gary Cheng (鄭光治) told an online earnings conference yesterday. “We
LEAK SOURCE? There would be concern over the possibility of tech leaks if TSMC were to form a joint venture to operate Intel’s factories, an analyst said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday stayed mum after a report said that the chipmaker has pitched chip designers Nvidia Corp, Advanced Micro Devices Inc and Broadcom Inc about taking a stake in a joint venture to operate Intel Corp’s factories. Industry sources told the Central News Agency (CNA) that the possibility of TSMC proposing to operate Intel’s wafer fabs is low, as the Taiwanese chipmaker has always focused on its core business. There is also concern over possible technology leaks if TSMC were to form a joint venture to operate Intel’s factories, Concord Securities Co (康和證券) analyst Kerry Huang (黃志祺)
It was late morning and steam was rising from water tanks atop the colorful, but opaque-windowed, “soapland” sex parlors in a historic Tokyo red-light district. Walking through the narrow streets, camera in hand, was Beniko — a former sex worker who is trying to capture the spirit of the area once known as Yoshiwara through photography. “People often talk about this neighborhood having a ‘bad history,’” said Beniko, who goes by her nickname. “But the truth is that through the years people have lived here, made a life here, sometimes struggled to survive. I want to share that reality.” In its mid-17th to
RSS