Sharp's future on shaky ground despite iPhone shipments
3rd Aug 2012 | 23:09
Sharp is facing severe financial woes
Despite announcing shipments of new iPhone screens, Sharp's overall financial outlook is suffering.
The Japanese manufacturer's quarterly report yesterday revealed losses of $1.76 billion (£1.13 billion) for the quarter, with a projected annual loss of $3.18 billion(£2.04 billion).
Those numbers didn't inspire confidence with investors, causing the firm's stock to sharply drop 28 percent to $2.45 (£1.56) per share, a 36-year low for the company.
Sharp reportedly still has $24.5 million (£16.3 million) in bonds maturing this month, with another $2.55 billion (£1.63 billion) in convertible bonds in September. The firm has also asked lenders for a back-up structure to help it secure long-term funds.
Foxconn worried for Sharp
Foxconn in particular is worried about Sharp's recent downturn.
In March, Foxconn had agreed to invest $1.7 billion ($1.08 billion) in Sharp, but that plan is now being reconsidered.
"We plan to discuss the investment again, but for sure it won't be at the original 550 yen ($7)per-share," said Simon Hsing, a representative of Foxconn's Taipei-based Hon Hai Precision Industry Co. branch.
"Sharp has agreed to us taking at least the same size of stake, with the possibility of an even larger stake."
Luckily for Sharp in the meantime, the Foxconn deal should still go through even if in a new form. Without a significant outside investment the LCD maker could find itself in a very uncomfortable position.