TOKYO May 11 Sharp Corp, Japan's
leading maker of liquid crystal displays, will rely on expanding
supplies of small panels to Samsung Electronics Co
while still shipping screens to rival Apple Inc, in a
bid to raise factory output levels and remain viable, three
In a midterm business plan it aims to release on Tuesday
when it announces its latest earnings results, Sharp will set a
goal of raising annual operating profit to $1.5 billion by March
2016 on revenue of $30 billion, the sources familiar with the
plan told Reuters on condition they remained anonymous.
Japan's TV pioneer avoided failure last year with a $4
billion bailout from lenders including Mizuho Financial Group
and Mitsubishi Financial Group. Sharp will
borrow another 150 billion yen ($1.47 billion) to help it repay
a 200 billion yen convertible bond due in September, the sources
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
Sharp in October had to mortgage its offices and factories
in Japan, including the one that makes screens for the Apple
iPad and iPhone. It also had to agree to trim its workforce by
10,000 people and seek buyers for overseas assets including TV
assembly plants 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. 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
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, the sources said.
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.
Sharp raised additional cash by agreeing in December to sell
an equity stake to mobile chipmaker Qualcomm Inc, for
$120 million. The two companies also agreed to cooperate in
developing new screens based on Sharp's low power consumption
IGZO panel technology.
The Japanese company will also try to expand sales of
household appliances in Southeast Asia in a bid to underpin
earnings over the next three years, the sources said.
Sharp will likely report a 500 billion yen net loss for the
year ended March 31, sources earlier told Reuters, worse than
the 450 billion yen deficit it forecast in November.
Its operating profit for the second half of its business year
was 20 billion yen, compared with the company's forecast for
13.8 billion yen, the sources added.
Since the start of the year, Sharp's shares have gained 49
percent, closing 6.4 percent higher on Friday at 450 yen. That
compares with a 41 percent rise in the benchmark Nikkei 225.