February 4, 2009 / 5:37 AM / 11 years ago

Sharp expected to post first operating loss: report

NEW YORK/TOKYO (Reuters) - Japan’s Sharp Corp (6753.T) is expected to post an annual operating loss of more than 10 billion yen ($112 million), its first ever full-year loss, due to slow sales and steep price falls, the Nikkei business daily said.

But Sharp’s shares price shrugged off the report and outperformed the broader market.

“This hardly comes as a surprise after companies like Sony and Hitachi have projected huge losses,” said Mizuho Asset Management fund manager Yoshihisa Okamoto.

Hit by a firmer yen, anemic demand and mounting costs of plant closures and other restructuring steps, Sony Corp (6758.T) now expects an annual operating loss of 260 billion yen, while Hitachi Ltd (6501.T) projects a record 700 billion yen net loss.

The Nikkei said Sharp’s annual earnings will also be hit by its plan to reduce TV and display panel inventories by the end of the business year, and Mizuho’s Okamoto said investors seem to have taken this as a positive step that could boost its profitability in the new business year from April 1.

Sharp is the world’s No.3 maker of LCD TVs behind Samsung Electronics Co Ltd (005930.KS) and Sony Corp (6758.T).

The maker of Aquos brand LCD TVs is likely to post an operating loss in excess of 10 billion yen for the year to March 31, the Nikkei said. That compares with the consensus for a 45.4 billion yen profit in a poll of 21 analysts by Reuters Estimates.

Sharp had forecast an operating profit of 195 billion yen at the start of the financial year, which it cut to 130 billion yen in October as cellphone sales weakened. It reported an operating profit of 183.7 billion yen for the previous business year.

The company said any revision to its full-year outlook will be announced on Friday, when it unveils its quarterly results.

Sharp is expected to log a net loss of almost 100 billion yen, the Nikkei said without citing sources — far from the 60 billion yen net profit it had projected in October.

In the previous financial year, it posted a net profit of 101.9 billion yen.

Besides sluggish demand and price declines, Sharp has also been hurt by the shrinking value of its 14.3 stake in electronics maker Pioneer Corp 6773.T and a $120 million fine for its participation in a price-fixing cartel for LCD panels.

The company said in December it would likely book an extraordinary loss of 43.2 billion yen largely due to the fall in value of its stake in Pioneer.

Shares in Sharp were up 4.5 percent at 692 yen in late afternoon trade, while the benchmark Nikkei average .N225 gained 2.6 percent.

Reporting by Ted Kerr and Kiyoshi Takenaka; Editing by Michael Watson

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