liquid crystal displays, will rely on
expanding supplies of small panels to
Samsung Electronics Co<005930.KS>
while still shipping screens to rival
Apple Inc, in a bid to raise factory
output levels and remain viable, three
sources said.
In a midterm business plan it aims to
release on Tuesday when it announces
its latest earnings results, Sharp will
set a goal of raising annual operating
profit to $1.5 billion by March 2016 on
revenue of $30 billion, the sources
familiar with the plan told Reuters on
condition they remained anonymous.
Japan's TV pioneer avoided failure last
year with a $4 billion bailout from
lenders including Mizuho Financial
Group <8411.T> and Mitsubishi
Financial Group <8306.T>. Sharp will
borrow another 150 billion yen to help
it repay a 200 billion yen convertible
bond due in September, the sources
said.
Those banks will dispatch personnel to
take up senior management positions
at Sharp, including a financial officer,
which will also reduce its number of
directors by 12 people, the sources
said.
Sharp in October had to mortgage its
offices and factories in Japan,
including the one that makes screens
for the Apple iPad and iPhone. It also
had to agree to trim its workforce by
10,000 people and seek buyers for
overseas assets including TV assembly
plants in China, Malaysia and Mexico.
Deepening its ties with Apple's South
Korean competitor, Samsung
Electronics, comes as growth at Apple
slackens and orders for screens slow.
Analysts project profit growth at the
smartphone pioneer to average less
than 5 percent for the next decade
compared with an average of 60
percent over the past five years.
Sharp, which at the start of the year
was forced to curtail production of
9.7-inch screens for Apple's iPad,
began limited panel fabrication for
Apple's next iPhone, with mass
production slated to start in June, the
sources said.
Samsung Electronics in March said it
would inject $103 million into Sharp in
return for a 3 percent stake in the
Japanese company in a deal that
secured it supplies of small LCD
screens. Sharp, however, rejected a
proposal by Samsung to buy its copier
and printer business.
Sharp raised additional cash by
agreeing in December to sell an equity
stake to mobile chipmaker Qualcomm
Inc , for $120 million. The two
companies also agreed to cooperate in
developing new screens based on
Sharp's low power consumption IGZO
panel technology.
The Japanese company will also try to
expand sales of household appliances
in Southeast Asia in a bid to underpin
earnings over the next three years,
the sources said.
Sharp will likely report a 500 billion
yen net loss for the year ended March
31, sources earlier told Reuters, worse
than the 450 billion yen deficit it
forecast in November.
Its operating profit for the second half
of its business year was 20 billion yen,
compared with the company's forecast
for 13.8 billion yen, the sources
added.
Since the start of the year, Sharp's
shares have gained 49 percent, closing
6.4 percent higher on Friday at 450
yen. That compares with a 41 percent
rise in the benchmark Nikkei 225.
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