Sharp warns of 'serious' difficulties: 'We may not survive'
Sharp issued its strongest warning to date that it may not be able to survive, as sinking profits and operating losses continue to drag down the beleaguered firm.
The liquid-crystal display (LCD) and television maker reported a second quarter operating loss of ¥74.8 billion ($936m), compared with a ¥30.1 billion ($376m) profit a year ago. It also booked a ¥84.4 billion ($1.1bn) charge in restructuring.
Sharp has also mortgages the majority of its offices and manufacturing plants in Japan, including a factory that develops iPhone and iPad displays, in a bid to generate much-needed income to support itself through its prolonged financial rut. The Tokyo, Japan-based firm also said it was looking to other companies to seek help from other companies.
The troubled TV maker is sinking rapidly, and forecast a full-year net loss of ¥450 billion ($5.6bn).
In a statement, Sharp said: "This raises serious doubts about [our ability] to continue as a going concern," noting that it was cutting pay and selling off assets, along with mass redundancies to claw back as much cash as it can.
While the failing company continues to seek loans from various Japanese banks in return for massive job cuts, as much as 10,000 jobs, it's not expected that Sharp will collapse this year. Taiwanese manufacturer Hon Hai (Foxconn) said earlier this year that it will continue with plans to buy a 9.9 percent stake in Sharp, despite the firm's forecast massive losses. Hon Hai said it was looking to the long term rather than just the next two to three months.
Around the same time as the Hon Hai pledge for investment, Sharp said it may leave the consumer business altogether, in spite of more than a century in the sector.
Between Sony, Panasonic, and Sharp, three Japanese display makers and electronics manufacturer, who have all reported financial troubles -- albeit Sony and Panasonic not on the scale of Sharp's decline -- are set to make 10 million fewer television sets between them in 2012 than the previous year, making a combined loss of around $21 billion.
Sharp's shares have declined by more than 75 percent since January. Its shares fell again close to 2 percent today ahead of the firm's earnings release.