Sharp Looking To Rebound By Supplying Both Apple And Samsung
May 12, 2013

Sharp Looking To Rebound By Supplying Both Apple And Samsung

redOrbit Staff & Wire Reports — Your Universe Online

Sources familiar with Sharp´s midterm business plan have told reporters the Japanese liquid crystal display manufacturer plans to expand their association with Samsung Electronics while still continuing to ship screens to the South Korean company´s rival, Apple.

The plan, the unnamed sources told Reuters reporters Reiji Murai and Nobuhiro Kubo on Friday, is to raise annual operating profit to $1.5 billion by March 2016 based on estimated revenue of $30 billion.

To do so, they will expand supplies of small panels to Samsung, attempting to increase production levels at their factories. Details of the plan will be released on Tuesday, according to Murai and Kubo.

“Japan's TV pioneer avoided failure last year with a $4 billion bailout from lenders including Mizuho Financial Group and Mitsubishi Financial Group,” the Reuters reporters said, noting that their sources indicate Sharp “will borrow another 150 billion yen ($1.47 billion) to help it repay a 200 billion yen convertible bond due in September.”

“Those banks will dispatch personnel to take up senior management positions at Sharp, including a financial officer, which will also reduce its number of directors by 12 people, the sources said,” Murai and Kubo added.

In October, Sharp had to mortgage factories and offices in Japan -- including the facility responsible for crafting screens for Apple iPhones and iPads -- while also cutting its workforce by approximately 10,000 people. Sharp also looked for overseas buyers for television assembly plants located in China, Malaysia and Mexico.

“Deepening its ties with Apple's South Korean competitor, Samsung Electronics, comes as growth at Apple slackens and orders for screens slow,” Murai and Kubo said. “Analysts project profit growth at the smartphone pioneer to average less than 5 percent for the next decade compared with an average of 60 percent over the past five years.

“Sharp, which at the start of the year was forced to curtail production of 9.7-inch screens for Apple's iPad, began limited panel fabrication for Apple's next iPhone, with mass production slated to start in June,” they added, citing their anonymous sources. “Samsung Electronics in March said it would inject $103 million into Sharp in return for a 3 percent stake in the Japanese company in a deal that secured it supplies of small LCD screens. Sharp, however, rejected a proposal by Samsung to buy its copier and printer business.”

The Japanese electronics company was able to raise additional cash by agreeing to sell an equity stake to Qualcomm for a reported $120 million last December. Qualcomm and Sharp also have announced plans to co-develop new screens based on the latter´s power-saving IGZO panel technology.

Sharp is expected to report a nearly $5 billion net loss for the fiscal year ended March 31 — worse than the $4.4 billion loss they predicted back in November, Reuters reported. The company´s operating profit for the second half of the business year was 20 billion yen, compared to a forecast of 13.8 billion yen, while their shares have increased by 49 percent since the beginning of the year, they added.