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Sharp warns on profits as Foxconn deal drags on

by on25 March 2016


Foxconn expected to lower its offer

Sharp has warned that its annual earnings were likely to fall short of its official guidance citing a slowing China market just as Foxconn is expected to lower its offer for the loss-making Japanese display maker.

The Yomiuri newspaper said that  Sharp could book an operating loss of "tens of billions of yen" for the year ending this month. Figures thrown around include an annual loss on that scale rather than the $88 million operating profit it had forecast in October.

However at the moment Sharp needs all this like a hole in the head. Foxconn was close to signing a deal to take over Sharp last month but hit the pause button due to revelations of previously undisclosed liabilities at the Japanese firm.

The negotions are dragging on and the pair are hoping to hammer out a deal by end-March.

Foxconn is seeking to lower its $4.3 billion offer for a two-thirds stake. But this has already fallen in value. The equity stake is the biggest portion of a deal that was at one stage estimated to be worth $5.8 billion.

Sharp has struggled as it failed to innovate enough in display technology to fend off pricing pressure from Asian rivals. Two bank bailouts since 2012 did nothing to help turn its business around, while a slowdown in China's smartphone market has hit its sales in recent months.

 

Last modified on 25 March 2016
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