Sharp Corp. (6753), Japan’s largest maker of liquid-crystal displays, rose the most in almost seven weeks in Tokyo trading after saying it started making smartphone panels using the company’s latest display technology.
Sharp climbed as much as 11 percent to 165 yen and traded at 162 yen as of 10:56 a.m., headed for its biggest gain since Sept. 4. The company began making smartphone displays using a semiconductor technology known as IGZO this month at its plant in Tenri, central Japan, Heihachiro Ochiai, a Sharp spokesman, said by phone today. Sharp is also in talks with Dell Inc. (DELL:US) and Hewlett-Packard Co. (HPQ:US) to supply IGZO displays, the Yomiuri newspaper said Oct. 20.
“The reports today and over the weekend are being taken positively after there was so much uncertainty over the company’s future,” Tsunenori Ohmaki, an analyst at Tachibana Securities Co. in Tokyo, said by phone today. “The company wouldn’t expand the IGZO operation, as there are risks to do so, without expecting orders.”
Gaining new customers for the displays would help Sharp as the company tries to end losses at its LCD business. The Osaka- based company had projected a second straight annual net loss and sold a stake in its LCD television panel operation earlier this year to Foxconn Technology Group founder Terry Gou to focus more on IGZO panels, which offer higher resolution while using less power than current liquid-crystal displays.
Today’s share-price increase trimmed Sharp’s decline this year to 76 percent. The stock gained the most in Japan’s benchmark Nikkei 225 Stock Average (NKY), which fell 0.8 percent.
Kyodo News reported earlier today that Sharp was converting the Tenri plant for IGZO smartphone display production. Ochiai declined to comment on the Yomiuri report, saying it’s Sharp’s policy not to publicly discuss specific clients.
The maker of Aquos televisions has been struggling to find buyers for IGZO panels designed for personal computers, a Sharp executive said last month. The company began making the panels for tablet computers, personal computers and business-use monitors in March.
“Sharp will depend on boosting sales of small and medium- sized panels to revive earnings next fiscal year,” said Yuji Fujimori, an analyst at Barclays Plc in Tokyo. “It would be positive for the stock if the company can sign contracts with HP or Dell.”
IGZO production for smartphones would help Sharp “if the company can get a significant amount of orders,” Fujimori said.
Sharp may post a net loss of 250 billion yen ($3.2 billion) in the year ending March 31, the company said in August. President Takashi Okuda is cutting more than 10,000 jobs and selling overseas plants as well as U.S. solar developer Recurrent Energy LLC in an attempt to return to profit next fiscal year, people with knowledge of the plans said last month.
Sharp aims to make a profit in the year starting April (APR) 1 with the help of job cuts and cost reductions, Okuda said in a statement Sept. 14.
The company has put up properties including its headquarters as collateral to raise funds from lenders. Sharp has turned to its main banks Mizuho Financial Group Inc. (8411) and Mitsubishi UFJ Financial Group Inc. for support to refinance debt after Standard & Poor’s and Moody’s Investors Service cut its credit ratings to junk.
The banks contributed to a total of about 360 billion yen in loans as of the end of September, Sharp said last month.
Sharp had 706 billion yen of short-term debt maturing within 12 months and 314 billion yen in long-term debts at the end of June, according to its financial statement. Sharp’s cash and near-cash stood at 218 billion yen at the time.
The electronics maker has been renegotiating terms for a proposed stake sale to Taipei-based Foxconn after widening its full-year loss forecast eightfold in August, triggering a slide in its share price. Foxconn agreed in March to invest 67 billion yen for a 9.9 percent stake in Sharp at 550 yen a share.
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