Bloomberg News

Sharp Falls on Record $3.8 Billion Loss Forecast: Tokyo Mover

February 02, 2012

Feb. 2 (Bloomberg) -- Sharp Corp. plunged to the lowest level in more than 31 years in Tokyo trading after forecasting a record loss on slumping prices for its Aquos televisions, an economic slowdown and a tax charge.

Japan’s largest maker of liquid-crystal display panels dropped as much as 16 percent, or the daily-limit 100 yen, to 528 yen on the Tokyo Stock Exchange. That’s the lowest level since June 11, 1980, according to data compiled by Bloomberg. The shares traded at 530 yen as of 10:01 a.m.

Sharp’s net loss in the year ending March 31 may be 290 billion yen ($3.8 billion), the biggest since it was founded a century ago, the Osaka-based company said yesterday, reversing an earlier forecast for a profit of 6 billion yen. The manufacturer and rivals Sony Corp. and Panasonic Corp. are forecasting losses because of weakening demand for TVs, while a stronger yen is eroding the repatriated value of their overseas sales of LCDs, mobile phones and solar cells.

“Japanese electronics makers must make a drastic change, as they lost competitiveness against global rivals,” Mitsuo Shimizu, an equity analyst at Cosmo Securities Co. in Tokyo, said by phone today. “They need to shift more production abroad or target more niche customers with high-end quality products.”

The surging yen, which touched a post-World War II high of 75.35 per dollar on Oct. 31, is eroding profit at the nation’s exporters including Sharp, Sony and Toyota Motor Corp. Japan’s currency has strengthened about 7 percent against the U.S. dollar in the past 12 months, the best performance among the world’s major currencies.

Revenue Forecast

Sharp cut its revenue forecast by 8.9 percent and said operating profit will be zero. The company also booked charges as it cut deferred tax assets by 119.8 billion yen in the quarter ended Dec. 31.

Tax credits can’t be claimed when a company isn’t expected to post a future profit. Companies need to reduce deferred assets and take appropriate charges when they forecast a loss.

Sharp, founded in 1912, said it will cut output in half at its largest TV panel factory in Sakai city, Osaka prefecture.

In April, 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.

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 an October forecast by DisplaySearch. The shipments rose 13 percent in the quarter ended Dec. 31 from a year earlier, according to the researcher, which estimates annual shipments to rise 10 percent in 2012.

--Editors: Terje Langeland, Anand Krishnamoorthy

To contact the reporters on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net; Mariko Yasu in Tokyo at myasu@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net


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