* Sharp to boost supply business to Samsung as Apple growth
* Posted worse-than-expected 545.35 bln yen net loss in year
to March 31
* Aims to restore operating profit to 150 bln yen by 2015/16
* Forecasts 80 bln yen op profit this year vs 147.27 bln
* Banks to lend it another 150 bln yen this year, send two
By Reiji Murai and Tim Kelly
TOKYO, May 14 Japanese display maker Sharp Corp
, a supplier to Apple Inc, will aim to boost
sales to the iPhone maker's rival Samsung Electronics Co
under a three-year rehabilitation roadmap after
posting a worse-than-expected $5.4 billion net loss in the last
The business plan, released on Tuesday, will also lean on
banks for another 150 billion yen ($1.5 billion ) in funds after
they saved it last year from failure, with a 200 billion yen
convertible bond falling due in September.
"For Sharp, the way forward is to forge various alliances to
generate new oppportunites," said Kozo Takahashi, who was named
president on Tuesday after his predecessor held the post for
barely a year.
Takahashi said Sharp, which took big writeoffs last year
after a focus on making screens for its own struggling TV
business left it with excess capacity, will double to two-thirds
the portion of panels produced for customers such as Samsung and
He added that Sharp would look at expanding cooperation with
Samsung in technology for small screens used in smartphones and
other mobile devices.
Sharp forecast an 80 billion yen operating profit for the
year to next March 31, exceeding the 52.9 billion yen average
estimate of 13 analysts surveyed by Thomson Reuters I/B/E/S.
That follows a 146.27 billion yen operating loss in the business
year just ended and a 545.35 billion yen net loss.
It will target an annual operating profit of 150 billion yen
by the year to March 2016, in line with the 100 billion to 200
billion yen results during the five years to March 2008, before
its TV and display businesses were hit by overcapacity, a strong
yen and competition from Korean and Taiwanese rivals.
Sharp was rescued last October by 360 billion yen in
emergency loans from Mizuho Financial Group, Mitsubishi
Financial Group and other lenders. In return, it had to
mortgage offices and factories in Japan, including one that
makes screens for Apple's iPad and its latest iPhone.
The company also agreed to trim its workforce by 10,000 and
seek buyers for overseas assets, including TV assembly plants in
China, Malaysia and Mexico.
Sharp said on Tuesday that Mizuho and Mitsubishi UFJ would
each nominate an executive to serve on its board and in its
A key challenge for Sharp's recovery, however, is keeping
its factories busy enough to earn profits that will satisfy its
creditors despite slowing growth in its business making screens
for Apple's iPads and iPhones.
Analysts project annual profit growth at Apple to average
less than 5 percent over the next decade, compared with an
average of 60 percent over the past five years.
In January, Sharp had to curtail production of 9.7-inch iPad
screens, hurting output levels and threatening its recovery in
profitability. The Japanese company is preparing to begin
large-scale production next month of screens for Apple's next
iPhone model, sources familiar with the matter said.
In a March agreement with Samsung Electronics that provided
cash-strapped Sharp 10.4 billion yen in capital in return for a
3 percent stake, Japan's leading liquid crystal display
fabricator also promised to supply small display screens to the
world's biggest maker of mobile phones.
Takahashi said orders from Samsung helped to maintain
capacity rates at one of its small-screen plants which,
according to industry sources, also produces iPad screens.
He also saw complementary areas in technology, where Samsung
has been at the cutting edge of ultra-thin organic
light-emitting diode (OLED) screens while Sharp is strong on
power-saving IGZO technology.
"Samsung has OLED and we have IGZO and we are mulling
cooperation there, although nothing concrete is yet on the
table," he said.
Sharp's shares have staged a turnaround since sinking to
their lowest in more than three decades last October while it
struggled with debt and sought a bailout.
Since mid-November, its share price has more than tripled,
compared with a 70 percent rise in Japan's benchmark Nikkei
average. On Tuesday, prior to the earnings announcement,
Sharp climbed 4.9 percent to 531 yen, its highest close in more
than a year.
But the company has a long way to recover, with its
shareholders' equity ratio whittled down to 6 percent at the end
of March from 9.6 percent at end-December and 23.9 percent at
the end of March last year.
Tetsuo Onishi, representative director in charge of finance,
told reporters that the company's three-year plan aimed to get
the ratio back to the 15 to 20 percent range, which it would
need to recapture the investment-grade credit rating it lost as
its financial situation deteriorated.