Nikkei slips as earnings disappointments hit Sharp, Tokyo Electron

Tue Apr 30, 2013 9:37pm EDT

* Tokyo Electron, JAL fall after disappointing guidance
    * Sharp sags, sources say to post worse-than-f'cast net loss

    By Dominic Lau
    TOKYO, May 1 (Reuters) - Japan's Nikkei average slipped on
Wednesday, after posting its best April performance in 20 years,
with Sharp Corp and semiconductor equipment maker Tokyo
Electron Ltd tumbling on disappointing earnings news. 
    Gains in Fujifilm Holdings Corp and Kao Corp
 after their quarterly earnings helped support the
market.
    The Nikkei eased 0.4 percent to 13,812.21 after
rallying 11.8 percent last month, marking its best April
performance since 1993 and a ninth straight month of gains --
its longest such winning streak since May 2005 to January 2006.
    "The fundamental view (on corporate profit growth) is still
sluggish," said Shun Maruyama, chief Japan equity strategist at
BNP Paribas. "The market has already priced in the effect of the
currency weakness. If we exclude the currency weakness,
companies are still bearish in the economic recovery forecast
for the current term and the next."
    "In the shorter-term, we have no choice but to recommend to
take profits," he said, but added that he remained upbeat on the
Nikkei and expected the benchmark to hit 15,000 by year-end.
    Expectations that Japanese firms would sharply raise their
earnings forecast for the fiscal year ending March 2014 had been
high after the yen weakened 21 percent since mid-November, when
Shinzo Abe, who became prime minister in December, promised
expansionary monetary and fiscal policies to revive the world's
third-largest economy.
    During the same period, the Nikkei has rallied nearly 60
percent.     
    Struggling Sharp Corp sagged 3.9 percent on news
the liquid crystal display maker was expected to post a worse
than forecast 500 billion yen net loss in the year that ended
March 31, two sources with knowledge of the matter told Reuters.
 
    Short-selling interest in Sharp remained high, although it
was off its high, with 86.27 percent of its stock that is
available to be borrowed out on loan as of April 29, down from
87.24 on April 22, according to data provider Markit.
    Tokyo Electron dropped 4 percent after it forecast an
operating profit of 18 billion yen ($185 million) for the year
ending March 2014, coming in below an average of 21 billion yen
from 18 analysts polled by Thomson Reuters I/B/E/S. It was the
top-weighted loser in the Nikkei.
    Japan Airlines also disappointed investors with its earnings
guidance for the current business year. Its stock lost 4.4
percent after hitting its highest level since relisting in
September in the previous session.
    Still, there are encouraging signs in the corporate sector.
Of the 57 companies that have reported quarterly figures so far,
53 percent of them either beat or met market expectations,
according to Thomson Reuters StarMine. That compared with 38
percent in the previous quarter.
    The securities sector also succumbed to
profit-taking, down 0.7 percent after surging 4.5 percent in the
previous session after Nomura Holdings Inc, Japan's top
brokerage, reported strong quarterly results on Friday. The
Japanese markets were closed on Monday for a public holiday.
    Nomura fell 1.6 percent and was the most traded stock on the
main board by turnover.
    The broader Topix index fell 0.5 percent to 1,159.35
on Wednesday morning.
    Fujifilm jumped 6.1 percent and was the fourth top-weighted
gainer after its operating profit came in slightly above its own
forecast for the year ended March, while its forecast for the
current business year was a touch ahead of market consensus.
    Kao Corp was the fifth top-weighted gainer, up 2.7 percent
after its first quarter earnings.
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