Sharp shares dip af­ter re­port of wider losses in fis­cal 2015

The Pak Banker - - COMPANIES/BOSS -

Sharp Corp. shares fell af­ter the Nikkei re­ported that the elec­tron­ics man­u­fac­turer may post a wider loss for the cur­rent fis­cal year than an­a­lysts had an­tic­i­pated.

Sharp is in the fi­nal stages of ne­go­ti­a­tions with Fox­conn Tech­nol­ogy Group, which is seek­ing to ac­quire the maker of Aquos tele­vi­sions af­ter years of wran­gling. Fox­conn has held off on sign­ing a fi­nal deal for more than a month as it looks more closely at Sharp's fi­nances, es­pe­cially its per­for­mance in the cur­rent quar­ter.

The Osaka-based com­pany is on track to post an op­er­at­ing loss of 90 bil­lion yen ($794 mil­lion) and net loss of 200 bil­lion yen for fis­cal 2015, which ends March 31, the Ja­panese news­pa­per said. Sharp said last week that ful­lyear earn­ings prob­a­bly missed fore­casts be­cause of a de­te­ri­o­ra­tion in China de­mand. Sharp and Fox­conn have reached broad agree­ment on an ac­qui­si­tion plan, and direc­tors of both com­pa­nies will vote on it Wed­nes­day, the Nikkei re­ported.

"The re­port of an­nual losses is hav­ing some im­pact, but there is also the is­sue of di­lu­tion on which there is very lit­tle clar­ity," said Hideki Ya­suda, an an­a­lyst at Ace Re­search In­sti­tute in Tokyo, re­fer­ring to the amount of shares that Sharp may is­sue as part of the Fox­conn deal. "It will take some time af­ter com­ple­tion of the deal and Sharp earn­ing show­ing ac­tual im­prove­ment. It's prob­a­bly short-term, in­di­vid­ual in­vestors that are mov­ing the shares now."

The shares of Sharp closed 0.8 per­cent lower at 130 yen in Tokyo on Tues­day, af­ter ear­lier de­clin­ing to a low of 123 yen. The Nikkei 225 Stock Av­er­age slipped 0.2 per­cent.

Sharp is pro­jected to post an op­er­at­ing loss of 24 bil­lion yen and net loss of 114 bil­lion yen, ac­cord­ing to the av­er­age of an­a­lysts' es­ti­mates com­piled by Bloomberg.

Fox­conn is seek­ing to cut the amount it will pay for eq­uity in Sharp to about 389 bil­lion yen, one per­son familiar with the mat­ter has said. The Tai­wanese com­pany will prob­a­bly still pay about 100 bil­lion yen for pre­ferred shares that the banks own, though the pay­ment may be de­layed, the per­son said. Terry Gou, Fox­conn's chair­man, had ini­tially agreed a month ago to buy Sharp for more than 600 bil­lion yen, but later pushed for a lower price.

Fox­conn will be able to de­lay its pur­chase of the banks' 200 bil­lion yen in pre­ferred shares for about three years, the Wall Street Jour­nal re­ported Tues­day, cit­ing peo­ple familiar with the mat­ter. Fox­conn will also can­cel a side agree­ment to buy the land be­neath a Sharp plant in Sakai, Ja­pan for 45 bil­lion yen, the news­pa­per re­ported.

Hon Hai Pre­ci­sion In­dus­try Co., Fox­conn's flag­ship com­pany, said on Sun­day it will hold a board meet­ing on March 30 as sched­uled, where it may dis­cuss the Sharp deal de­pend­ing on the stage of ne­go­ti­a­tions, ac­cord­ing to a state­ment to the Tai­wan stock ex­change.

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