Sharp to sell ¥4.9 billion in shares to Qualcomm

Bloomberg

Sharp Corp., the TV maker that warned last month about its ability to survive, said Tuesday it has agreed to sell a stake valued at about ¥4.9 billion to Qualcomm Inc. and team up to jointly develop displays.

Sharp will sell 30.12 million shares at ¥164 apiece to Qualcomm this month and may sell another ¥4.94 billion in shares in a second tranche, the Osaka-based company said in a statement. This month’s sale is at a discount of 5.7 percent compared with Sharp’s closing price in Tokyo trading Tuesday.

Japan’s largest liquid-crystal-display maker needs to restore its balance sheet after hemorrhaging ¥103 billion in cash from operations in the fiscal first half amid dwindling demand and competition from Samsung Electronics Co. Sharp turned to Qualcomm, the biggest maker of mobile-phone chips, as the firm has failed to secure a planned investment from Taiwan’s Foxconn Technology Group.

Sharp said last month there was “material doubt” about its ability to survive after forecasting a record ¥450 billion full-year loss because of sluggish demand for its panels.

Shares of Sharp rose 1.2 percent to close at ¥174 before the announcement, compared with a 0.3 percent drop in the benchmark Nikkei 225 stock average. The company has declined 74 percent this year, making it the world’s second-worst performing major stock.

Sharp, the 100-year-old inventor of mechanical pencils, is selling assets and cutting jobs to revive profit after posting a record ¥376 billion loss in the fiscal year that ended March 31.

The company will book a ¥25.3 billion, one-time charge in the quarter ending Dec. 31 to eliminate 2,960 jobs, it said Nov. 20.