Sharp Narrows Third-Quarter Loss on Weaker Yen, Workforce Cuts

Sharp Corp. (6753), the Japanese TV-maker that has warned about its ability to survive, posted a narrower loss helped by job cuts, asset sales and a weaker yen.

The net loss was 36.7 billion yen ($398 million) in the three months ended Dec. 31, compared with a loss of 174 billion yen a year earlier, according to a statement today. The Osaka- based company was expected to report a 34 billion yen loss, based on the average of three analyst estimates compiled by Bloomberg.

Japan’s largest maker of liquid-crystal displays has shed staff and sold a stake to Qualcomm Inc. as it restructures amid slowing TV sales and competition from Samsung Electronics Co. Sharp and other Japanese exporters have also benefited from the yen’s about 15 percent plunge since the end of September, which boosts the repatriated value of overseas sales.

“The weaker yen is helping Japanese TV-makers like Sharp improve business,” Keita Wakabayashi, a Mito Securities Co. analyst in Tokyo, said before the announcement. “Demand hasn’t yet shown any significant recovery.”

The company reiterated that it expects an annual loss of 450 billion yen, its second straight unprofitable year. Sony Corp. and Panasonic Corp. (6752), Japan’s two biggest TV-makers, have also announced turnaround plans because of losses from producing televisions.

Sharp made an operating profit, or sales minus the cost of goods sold and administrative expenses, of 2.6 billion yen in the three months ended Dec. 31. It had an operating loss of 24 billion yen a year earlier. Third-quarter sales totaled 678.2 billion yen.

Job Cuts

Sharp expected to book a 25.3 billion-yen one-time charge in the quarter to eliminate 2,960 jobs, it said Nov. 20. The following month, it agreed to sell as much as 9.9 billion yen of new shares to Qualcomm. The chipmaker has so far bought 4.9 billion yen as part of the two-step transaction.

The TV-maker has also held talks about selling a stake to Apple Inc. assembler Hon Hai Precision Industry Co. (2317) Hon Hai founder Terry Gou bought a stake in a Sharp LCD plant last year.

Slower than anticipated sales of Apple Inc. iPads and iPhone 5s may also have hit Sharp. The U.S. phone-maker is Sharp’s single biggest customer, accounting for 3.4 percent of sales, according to data compiled by Bloomberg.

The Japanese company slowed a production line making iPad screens in December, Reuters said last month, citing people it didn’t identify. It is also cutting production of iPhone panels this quarter to about 40 percent of capacity from close to 100 percent in the previous three months, the Nikkei said Jan. 15. Sharp said it wasn’t the source of the information in the reports.

Photographer: Kiyoshi Ota/Bloomberg

A Sharp Corp. 32-inch 4K2K liquid crystal display IGZO monitor is displayed in Tokyo. The TV-maker said last year there was “material doubt” about its ability to survive after it hemorrhaged 103 billion yen in cash from operations in the six months ended September. Close

A Sharp Corp. 32-inch 4K2K liquid crystal display IGZO monitor is displayed in Tokyo.... Read More

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Photographer: Kiyoshi Ota/Bloomberg

A Sharp Corp. 32-inch 4K2K liquid crystal display IGZO monitor is displayed in Tokyo. The TV-maker said last year there was “material doubt” about its ability to survive after it hemorrhaged 103 billion yen in cash from operations in the six months ended September.

Material Doubt

The TV-maker said last year there was “material doubt” about its ability to survive after it hemorrhaged 103 billion yen in cash from operations in the six months ended September. The company has 200 billion yen of convertible bonds maturing this year, according to data compiled by Bloomberg. Its debt was cut to junk by Fitch Rating and Standard & Poor’s last year.

The TV-maker rose 5.8 percent to 329 yen in Tokyo trading today, before the earnings announcement. It’s risen 8.6 percent this year. In 2012, it tumbled 55 percent, the worst performance in the Nikkei 225 Stock Average.

Sharp’s main banks, Mizuho Corporate Bank Ltd. and Bank of Tokyo-Mitsubishi UFJ Ltd., are set to extend the due date of 360 billion yen of loans from June 30 on the condition the TV-maker posts an operating profit in the six months to March 31 and forecasts a net profit next fiscal year, a person with direct knowledge of the matter said last month.

The company is also in final talks about selling a TV plant in China to Lenovo Group Ltd. and another in Malaysia to Wistron Corp., the Nikkei said last month.

To contact the reporter on this story: 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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