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Sharp issues survival warning as it forecasts huge loss | Sharp issues survival warning as it forecasts huge loss |
(35 minutes later) | |
Japan's Sharp has issued a warning about its future saying that it has found it tough to raise money amid mounting losses. | Japan's Sharp has issued a warning about its future saying that it has found it tough to raise money amid mounting losses. |
It issued the warning as it forecast a loss of 450bn yen (5.6bn; £3.5bn) for the year to 31 March 2013. | It issued the warning as it forecast a loss of 450bn yen (5.6bn; £3.5bn) for the year to 31 March 2013. |
Sharp, which has struggled amid falling sales and a rising yen, has had its credit rating cut to "junk" status. | Sharp, which has struggled amid falling sales and a rising yen, has had its credit rating cut to "junk" status. |
It said it was looking to restructure its business in an attempt to return to profitability. | It said it was looking to restructure its business in an attempt to return to profitability. |
When a firm's bonds are rated as "junk" it means some institutions may no longer invest in them, making it harder for them to raise fresh capital. | When a firm's bonds are rated as "junk" it means some institutions may no longer invest in them, making it harder for them to raise fresh capital. |
"Sharp is in circumstances in which material doubt about its assumed going concern is found," the company said in a statement. | "Sharp is in circumstances in which material doubt about its assumed going concern is found," the company said in a statement. |
Analysts said that given its troubles, Sharp may find it tough to survive in the long run. | |
"Perhaps it will not fail within this year, but I don't think Sharp has a viable business in the next three to five years," said Tetsuro Ii, chief executive of Commons Asset Management in Tokyo. | |
"The company hasn't got much time left and they need to cut off businesses that they can, conserve cash and... produce something that's really competitive." | |
Growing troubles | |
Sharp's troubles are not isolated. Most of the big Japanese electronics giants have seen their fortunes tumble in recent times. | |
Also on Thursday, Sony reported a loss of 15.4bn yen for the July to September quarter. | |
On Wednesday, Panasonic said that it now expected to make a loss of 765bn yen in the current financial year. It had previously forecast a profit of 50bn yen. | |
Japanese electronics makers have been hurt by a slowing demand and falling prices of TVs in key markets. | |
At the same time, rising competition from low-cost manufacturers coupled with a strong yen - which makes Japanese goods more expensive - has also hit their competitiveness. | |
Faced with these challenges, Sharp, Sony and Panasonic have all announced plans to restructure their business in an attempt to cut costs and improve profitability. | |
However, analysts said that while these attempts were a step in the right direction, it was unclear how the firms will drive future profit growth, not least because demand for their key products continued to remain subdued. |
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