US based Intel Corp and Qualcomm Inc are in talks to
jointly invest about 30 billion yen in debt-stricken Japanese consumer
electronics maker Sharp Corp, two sources familiar with
the matter said on Wednesday.
Details of the talks were not known, but Sharp, whose displays are used in Apple Inc's
iPads and iPhones, is looking to small displays to spark a revival in
its fortunes and sees the new generation of high-end laptops as a fresh
Intel, which has been promoting a new category of
thin "Ultrabook" laptops with touch screens, has long been interested
in Sharp's power-saving IGZO displays, as it responds to a shift from
PCs to smartphones and tablets.
Sharp may reach an agreement as
early as the end of this month with Qualcomm, said one of the sources,
who asked not to be identified as they were not authorized to speak to
the media, adding talks with Intel are less concrete amid the
chipmaker's unclear financial picture.
Shares in Sharp jumped 11
percent on the news, but brokers said the rally was likely to be brief
as the potential investment would do little to address the firm's
fundamental problems as it struggles with a TV business in retreat,
aggressive competition and a $13.8 billion debt load, according to
Thomson Reuters data.
"Sharp has talked about cutting debt and
inventory, but they haven't made it clear how they plan to generate cash
flow and strengthen their capital base," said Toshiyuki Kanayama,
senior market analyst at Monex Inc.
LCD maker has been in talks for months with Taiwan's Hon Hai Precision
Industry Co Ltd, which is considering becoming the
century-old Japanese firm's biggest shareholder, but has said it is
looking at other alliances as well.
A Sharp spokeswoman said no
decisions have been made about accepting investments from other
companies, while an Intel official declined to comment. Qualcomm
officials were unable to immediately comment.
firm, which has lost three-quarters of its value so far in 2012, nearly
doubled its forecast full-year net loss to 450 billion yen earlier this
month after booking a $1.1 billion restructuring charge in
Effectively shunned by the debt capital markets
because of its massive losses and falling market share, Sharp received a
guarantee for 360 billion yen in loans from its two main lenders, Bank
of Tokyo-Mitsubishi UFJ and Mizuho Corporate Bank, in September.
The loans are enough to sustain the
company through its next financial year to March 2014, which includes
the redemption of 200 billion yen in convertible bonds next September,
Sharp Chief Financial Officer Tetsuo Onishi told a briefing.
is promoting ultrabooks to counter tablet computers from Apple and
earlier this year signed deals with several panel makers to ensure
adequate supplies for a wave of ultrabooks with touch screens that use
Microsoft Corp's Windows 8.
In late morning trade, Sharp shares stood at 162 yen, up 6.6 percent, while the benchmark Nikkei 225 was little changed.
who shorted the stock are covering their positions, so the rallies will
likely be short-term," said Makoto Kikuchi, chief executive of Myojo
© Thomson Reuters 2012