Sharp predicts net annual loss of $5.6bn; doubts it can stay in business

By Peter Gothard
01 Nov 2012 View Comments
Sharp CES 2012

Japanese electronics firm Sharp has issued a profit warning, expressing "material doubt" that it will be able to stay in business.

Expecting to end the financial year in March 2013 with a net loss of Y450bn (£3.5bn), Sharp's main problems stem from cutthroat competition between it and rivals Hitachi and Sony, and falling demand for LCD televisions – a cornerstone of Sharp's business.

Further reading

"Sharp is in circumstances in which material doubt about its assumed going concern is found," Sharp said in a statement to the Tokyo Stock Exchange.

The company, which was founded in 1912 and specialised in mechanical pencils, has already had to mortgage its Osaka headquarters building and is now said to be in talks with Taiwanese billionaire Terry Gou, founder of manufacturer Hon Hai, which has built iPhones and other high-end consumer tech.

Panasonic, meanwhile, saw its shares slump by 19 per cent yesterday as it admitted a similarly grim annual forecast of Y765bn (£5.9bn) in losses, saying the costs of attempting to restructure its business will be 11 times greater than the company originally thought.

The LCD TV market slowdown is again said to be the overriding factor in the company's slide in fortunes.

Sony's story looks a little more hopeful, as its continuing attempts to streamline into a gaming and interactive media-based company have seen it achieve an operating profit of Y30.3bn (£234m), compared to a Y1.64bn (£12.76m) loss this time last year.

Selling its chemical business and supplementing its flagging television and camera areas with a stronger videogames arm – including predicted annual sales of 16 million PlayStation 3s and 10 million PS Vita handheld consoles – seems to be paying off. The company has also been mercifully free of the hacking attacks that brought its online services to their knees last year.

Nevertheless, Sony's shares have still seen a drop of around 19 per cent since the end of June.

Reader comments
blog comments powered by Disqus
Windows 10 - will you upgrade?

Microsoft has made an early version of Windows 10 - its next operating system - available for download. The OS promises better integration and harmonisation across platforms, including mobile and desktop. Will your business be upgrading?

38 %
26 %
15 %
21 %