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Sharp Said to Delay Share Sale on Growth Concerns

Sharp Said to Delay Share Sale Amid Growth Outlook Concerns
Sharp Corp. is considering ways to raise capital, including a public offering and third-party allocation of shares, while no decisions have been made, it said in an Aug. 1 filing. Photographer: Kiyoshi Ota/Bloomberg

Sharp Corp. will delay a plan to raise about 100 billion yen ($1 billion) from public and private share sales because of concern with the company’s growth prospects, two people with knowledge of the matter said.

The supplier of screens to Apple Inc. is postponing the plan by about two months until November, one of the people said, asking not to be identified because the matter is private. The Osaka-based company needs more time to develop its growth strategy, the person said.

Competition in liquid-crystal displays and flat-panel TVs drove Sharp to back-to-back losses totaling 921 billion yen in the past two financial years, during which the ratio of equity to total assets fell to 6 percent from 35.6 percent. The 100-year-old company has previously raised funds selling minority stakes to Samsung Electronics Co. and Qualcomm Inc.

“In order to attract investors, Sharp needs to have a growth story to tell, preferably for a period or three years or more,” said Junya Ayada, an analyst at Daiwa Securities Co. in Tokyo.

Sharp had planned to raise about 100 billion yen through a share sale to investors in September, people familiar with the matter said earlier this month. Makita Corp. and Lixil Group Corp. may buy stakes worth 10 billion yen each, one of the people said.

Sharp is considering ways to raise capital, including a public offering and third-party allocation of shares, while no decisions have been made, it said in an Aug. 1 filing.

Miyuki Nakayama, a spokeswoman for Sharp, declined to comment today on any potential public offering.

Equity Sales

Shares of Sharp fell 0.8 percent to 397 yen in Tokyo trading. The shares have climbed 31 percent so far this year, while Japan’s benchmark Topix index has gained 30 percent.

Companies have raised more than $32 billion in share sales in Japan this year, compared with $23 billion for all of last year, according to data compiled by Bloomberg.

Dentsu Inc., the Japanese advertising company that bought U.K.’s Aegis Group Plc. in March, raised $1.2 billion in a July offering. Suntory Beverage & Food Ltd. and Olympus Corp. are also among the companies that raised funds through share sales this year, the data show.

Operating Loss

Earlier this month, Sharp reported a net loss of 18 billion yen in the three months ended June, narrower than the 138 billion-yen loss a year earlier. The maker of screens for the iPhone 5 and iPad was projected to post a loss of 24 billion yen, according to the median estimate of three analysts surveyed by Bloomberg News.

Operating profit, or sales minus the cost of goods sold and administrative expenses, totaled 3 billion yen for the quarter, compared with a loss of 94 billion yen a year earlier, the company said. Sales rose 33 percent to 608 billion yen.

The operating loss at the LCD unit narrowed to 9.5 billion yen during the quarter from a loss of 63.5 billion yen a year earlier, according to the company.

The audio-visual and telecommunications unit, which sells TVs and mobile phones, also narrowed its loss, while the solar-panel division turned profitable during the quarter, Sharp said Aug. 1.

Sharp has 200 billion yen of convertible bonds maturing this year, according to data compiled by Bloomberg. Its debt was cut to junk by Fitch Ratings Ltd. and Standard & Poor’s last year.

The company is forecasting net income of 5 billion yen for the year to March 2014, its first annual profit in three years, after job cuts. Sharp sold a stake in its largest LCD plant to Taiwanese billionaire Terry Gou last year to boost sales through his Foxconn Technology Group, the world’s biggest contract manufacturer of electronics.

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