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Japan Display Falls Below IPO Price After Forecast Miss

Japan Display Inc. (6740) plunged to 25 percent below last month’s initial public offering price in Tokyo trading after reporting preliminary earnings that missed its forecasts.

Japan Display fell 16 percent to close at 672 yen. That compares with the 900 yen IPO price before the stock started trading March 19. The maker of screens for Apple Inc. (AAPL) devices said it estimated operating profit of 27.2 billion yen ($266 million) for the year ended March, compared with its earlier projection of 30.4 billion yen.

Customer demand for screens fell at the end of the fourth quarter and price negotiations were difficult because of lower prices for displays used in medium-range smartphones, the Tokyo-based company said. Revenue for the year was estimated at 614.2 billion yen, compared with the earlier forecast of 623.4 billion yen.

“One of their major customers has delayed purchases into the following quarter,” said Damian Thong, a Tokyo-based analyst at Macquarie Group Ltd. “I think they tried to strong-arm JDI into accepting a lower price and it appears that JDI essentially said no.”

The analyst said in a note the company held a conference call earlier today. Kazuhiko Kubota, a Japan Display spokesman, declined to provide a transcript of the conference call.

Photographer: Kiyoshi Ota/Bloomberg

A Japan Display Inc. employee walks through a clean room on the production line at the company's plant in Mobara, Chiba Prefecture, Japan. Japan Display slumped 15 percent in its first day of trading last month, the worst debut of any Asia-Pacific initial public offering worth at least $1 billion since 2008. Close

A Japan Display Inc. employee walks through a clean room on the production line at the... Read More

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Photographer: Kiyoshi Ota/Bloomberg

A Japan Display Inc. employee walks through a clean room on the production line at the company's plant in Mobara, Chiba Prefecture, Japan. Japan Display slumped 15 percent in its first day of trading last month, the worst debut of any Asia-Pacific initial public offering worth at least $1 billion since 2008.

Customer demand for screens fell at the end of the fourth quarter and price negotiations with at least one Chinese company were difficult because of lower prices for displays used in medium-range smartphones, Japan Display’s Kubota said.

“The downward revision is very negative for its share price,” Yoshihiro Okumura, a general manager at Chiba-Gin Asset Management Co. in Tokyo, said in a telephone interview. “There is now more uncertainty going into the year ahead.”

Japan Display slumped 15 percent in its first day of trading last month, the worst debut of any Asia-Pacific initial public offering worth at least $1 billion since 2008.

The company was formed when Sony Corp. (6758), Toshiba Corp. and Hitachi Ltd. spun off their panel businesses to state-backed Innovation Network Corp. of Japan after failing to keep pace with South Korea’s Samsung Electronics Co. (005930)

To contact the reporters on this story: Takashi Amano in Tokyo at tamano6@bloomberg.net; Chris Shimamoto in Tokyo at cshimamoto@bloomberg.net

To contact the editors responsible for this story: Michael Tighe at mtighe4@bloomberg.net Aaron Clark, Frank Longid

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