TOKYO — Sharp Corp., the world’s worst- performing major stock, said Thursday there is “material doubt” about its ability to survive after forecasting a record $5.6 billion full-year loss on falling demand for its display panels.
The net loss will probably be 450 billion yen in the year ending March 31, the Osaka-based TV maker said in a statement, scrapping its earlier projection for a 250 billion-yen loss. The new forecast compares with the 296 billion-yen loss average of 17 analyst estimates compiled by Bloomberg.
Sharp has failed to win a planned 67 billion-yen investment from Taiwan’s Foxconn Technology Group and has had difficulty selling commercial paper as it burns through cash. The company said its loss for the six months ended Sept. 30 was “huge,” stemming from falling prices for liquid-crystal-display panels, delays at an LCD factory and declining sales in Japan and China. The company’s warning echoes that made by chipmaker Elpida Memory Inc. before it filed for bankruptcy in February.
“Sharp is in a desperate situation as it tries to deal with short-term funding problems,” said Ichiro Takamatsu, a fund manager at Tokyo-based Bayview Asset Management, which oversees 150 billion yen. “It doesn’t have a long-term vision except for its plan to sell more small- and mid-sized LCDs.”
Sharp follows Panasonic Corp. in predicting losses worse than analysts estimated after losing ground to Samsung Electronics Co. in TVs. In contrast, Sony Corp. reiterated its forecast for a first annual profit in five years after slashing costs, exiting panel ventures and trimming its TV lineup.
“Sharp is in circumstances in which material doubt about its assumed going concern is found,” the company said in a statement to the Tokyo Stock Exchange.
The company’s turnaround plan includes seeking voluntary retirements, cutting salaries, selling assets and reducing capital investments, it said. Japan’s largest maker of liquid- crystal displays also is considering several partnerships as talks with Foxconn continue, President Takashi Okuda said.
“I seriously take to heart that we had to add that comment,” Okuda said. “We will revive our earnings and trust from investors as soon as possible. We will show that with a result.”
Sharp fell 1.7 percent to 169 yen at the close in Tokyo trading before the announcement. The stock has plunged 75 percent this year, the worst performer among more than 1,600 companies in the MSCI World Index.
Panasonic, Japan’s second-biggest TV maker, said Wednesday it expects a 765 billion-yen full-year net loss, or 30 times bigger than analysts had estimated, citing restructuring costs and falling demand for its products. Osaka-based Panasonic said it won’t pay a dividend for the first time since 1950 because of an “urgent need” to improve its financial position.
Sony, Japan’s biggest consumer-electronics exporter, kept its full-year net-income forecast unchanged at 20 billion yen even as it unexpectedly posted a seventh straight quarterly loss on slumping demand for Bravia TVs and Cyber-shot cameras.
Sharp widened its full-year forecast for operating loss for LCDs to 132 billion yen from 105 billion yen, saying it took a 53.5 billion-yen writedown on its large LCD inventory and sales of small LCDs fell below estimates.
Global TV demand is expected to remain little changed in 2013 after shipments of all TV types declined more than 4 percent this year, researcher DisplaySearch said.
Sharp also posted a 61 billion-yen charge on deferred tax assets and took a 30.1 billion-yen writedown on equipment for solar-panel production.
“Sharp must take drastic measures or else banks will give up on it,” said Makoto Kikuchi, chief executive officer at Myojo Asset Management Japan Co., a Tokyo-based hedge fund advisory firm.
Sharp, the century-old inventor of mechanical pencils, has put up properties, including its headquarters, as collateral to raise funds. Sharp turned to its main banks Mizuho Financial Group and Mitsubishi UFJ Financial Group as it struggled to refinance debt after Standard &Poor’s and Moody’s Investors Service cut its credit ratings to junk.
The banks contributed to a total of about 360 billion yen in loans by the end of September, Sharp said last month.