Nikkei slips for 3rd straight day; Sharp, Tokyo Electron sag

Wed May 1, 2013 2:26am EDT

* Tokyo Electron, JAL fall after disappointing guidance
    * Sharp sags, sources say to post worse-than-f'cast net loss
    * Investors take profit on SoftBank and Nomura Holdings

    By Dominic Lau
    TOKYO, May 1 (Reuters) - Japan's Nikkei average fell 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 cap losses.
    The benchmark Nikkei ended 0.4 percent lower at
13,799.35, down for third straight session.
    It rallied nearly 12 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 this fiscal year ending March 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 economy.
    During the same period, the Nikkei index has rallied nearly
60 percent. Japanese equities carry a 12-month forward
price-to-earnings ratio of 15.1, a level not seen since May 2010
but still below its 10-year average of 16.4, data from Thomson
Reuters Datastream showed.
    Investors will keep an eye on the outcome of the U.S.
Federal Reserve's two-day policy meeting later in the day.      
    
    STRUGGLING SHARP
    Sharp sagged 5 percent on news that the liquid crystal
display maker was expected to post a worse than forecast 500
billion yen ($5.1 billion) net loss in the year that ended March
31. Sources with knowledge of the earnings result confirmed a
report by the Nikkei newspaper to Reuters on Wednesday.
 
    Tokyo Electron dropped 4.1 percent after it forecast an
operating profit of 18 billion yen for the fiscal year through
March, coming in below an average of 21 billion yen from 18
analysts polled by Thomson Reuters I/B/E/S.
    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.
    "I clearly don't see these forecasts are catalysts for
investors to go crazy on Japan," a senior dealer at a foreign
bank said.
    "But the conservative guidance leaves room for revision if
the FX is maintained at this level, or the yen gets weaken."
    
    PROFIT-TAKING ON SOFTBANK, NOMURA
    Other notable decliners included SoftBank Corp,
which fell 1.7 percent as investors took profit on the mobile
operator after it hit a seven-year high on Tuesday before it
announced results which were largely in line with expectations.
    Investors also cashed in on Japan's top brokerage Nomura
Holdings after climbing 4.5 percent in the previous
session after strong quarterly results. The stock was down 2.5
percent and the most traded stock on the main board by turnover.
    The broader Topix index fell 0.6 percent to
1,158.37, with trading volume hitting a four-week low at 3.07
billion shares.
    Still, there are encouraging signs in the corporate sector.
Of the 57 companies that have reported quarterly figures as of
Tuesday, 53 percent of them either beat or met market
expectations, according to Thomson Reuters StarMine. That
compared with 38 percent in the previous quarter.
    Fujifilm jumped 6.6 percent 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 2.5 percent
after its first quarter earnings.
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