/

Sharp sniffs profit via LCDs for Samsung

Light at the end of losses, job cuts, stake sales

Bloomberg

Sharp Corp. forecast its first annual profit in three years as Japan’s largest maker of liquid-crystal displays expects orders to recover after signing a deal with Samsung Electronics Co.

Net income may be ¥5 billion in the year that started April 1, compared with a loss of ¥545 billion a year earlier, the Osaka-based company said Tuesday.

The maker of Aquos televisions said it will recover from two consecutive years of losses, after eliminating jobs and selling stakes to Samsung and Qualcomm Inc. Sharp turned its biggest display plant into a venture with Taiwanese billionaire Terry Gou last year to boost sales of large displays through Gou’s Foxconn Technology Group, the world’s biggest contract manufacturer of electronics.

“The Foxconn venture and the tieup with Samsung are bringing in more display orders,” Kota Ezawa, an analyst at Citigroup Inc. in Tokyo, said before the announcement. The weakening yen is “also positive,” he said.

Operating profit, or sales minus the cost of goods sold and administrative expenses, will probably increase to ¥80 billion this fiscal year, while revenue is expected to be rise to ¥2.7 trillion, the company said Tuesday.

Sharp will promote Executive Vice President Kozo Takahashi to replace Takashi Okuda as president. Okuda will become chairman, succeeding Mikio Katayama.

Sharp, which also makes smartphones, tablet computers, printers and air purifiers, joined Sony Corp. and Panasonic Corp. in projecting improved earnings this fiscal year after cutting jobs and selling assets. Japan’s three biggest TV makers are also benefiting from a weakening yen that’s boosting the repatriated value of overseas earnings, even as they continue to lose market share to South Korean rivals.

Sharp’s share of revenue in the global flat-panel TV market dropped to 5.4 percent last year from 6.6 percent in 2011, according to Santa Clara, California-based DisplaySearch. Suwon, South Korea-based Samsung boosted its share to 27.7 percent, while Seoul-based LG Electronics Inc. expanded its share to 15 percent from 13.8 percent, according to the researcher.

Sharp, with ¥200 billion in convertible bonds maturing in September, has been relying on a credit lifeline from its two main lenders, Mizuho Financial Group Inc. and Mitsubishi UFJ Financial Group Inc. The banks may add ¥150 billion to Sharp’s credit line, two sources said last week.

The electronics maker secured ¥360 billion in loans due in June from the two banks, Sharp said in September. The maturity will be extended provided that Sharp reports an operating profit for the six months that ended March 31 and forecasts net income for the fiscal year that started April 1, another sources said in January.

Pioneer-DoCoMo ties

Kyodo

Struggling electronics maker Pioneer Corp. said Monday it will form a capital and business alliance with NTT DoCoMo Inc. and enhance ties with Mitsubishi Electric Corp. in a bid to survive in the mainstay car electronics business on a better financial base.

Pioneer, which makes car navigation systems and other electronics products, said it will issue new shares worth some ¥8.9 billion — ¥5 billion to mobile phone carrier NTT DoCoMo and about ¥3.9 billion to Mitsubishi Electric — through a third-party allocation.

The deal will raise Mitsubishi Electric’s stake in Pioneer to 7.49 percent, while NTT DoCoMo will acquire a 6.92 percent stake, making both of them major shareholders in the company.

Mitsubishi Electric is likely to replace Sharp Corp. as the biggest shareholder, given that Sharp, holding a 9.19 percent stake as of the end of March, is planning to sell its shareholdings in Pioneer as part of restructuring.

The decision was made at a meeting of Pioneer’s board of directors Monday, the same day the company reported a group net loss of ¥19.55 billion for the business year that ended in March, marking its first red ink in three years.

Pioneer plans to boost its information service business for car users via smartphones and tablet computers in cooperation with NTT DoCoMo. Pioneer intends to capitalize on Mitsubishi Electric’s strength in developing car navigation systems.

Pioneer President Susumu Kotani said at a press conference that the aim of the alliance is to “use the strengths of both companies” to expand sales of in-vehicle devices.