Original URL: https://www.theregister.com/2012/08/30/hon_hai_sharp_deal_depends_on_profits/
Foxconn overlord seeks cheap Sharp stake to cope with Apple fanbois
Shuffling, moaning hordes clamour for more SCREENS
Posted in On-Prem, 30th August 2012 15:02 GMT
Foxconn daddy Hon Hai wants a piece of Sharp so it can improve the moribund telly biz's production of Apple iPhone displays - but it will only do the deal if talks on how to boost Sharp's earnings pan out.
Hon Hai executive Tai Jen Wu told reporters in Sakai, Japan, that discussions about sharpening Sharp's profits were central to the investment deal.
The Foxconn overlord had promised to fork out ¥66.9bn (£547m, $853.8m) for a 9.9 per cent stake in Sharp and another ¥66bn (£539.58m, $842.3m) for a 46.5 per cent stake in the display maker's joint venture telly business with Sony. But when Sharp announced a massive billion-yen net loss in the second quarter that sent shares tumbling, Hon Hai said it wanted a new, cheaper agreement.
"Our alliance with Sharp will raise our profile and help us as a supplier to Apple," Tai Jen Wu said, but he added that whether or not the investment goes ahead depends on Sharp taking Hon Hai's advice on how to sort itself off.
Both Hon Hai's Foxconn and Sharp make screens for iPhones and iPads, designed by Tim Cook-led Apple.
Like most telly businesses, Sharp has been suffering from a global lack of demand, leading to the firm's worst ever annual loss in the last business year. Its descent into the red was accelerated by the strong yen that put South Korean rivals LG and Samsung in a stronger position as well as reducing its own earnings.
However, Hon Hai still seems to be interested in the firm and it's expected to announce a deal with Sharp as early as this Friday. ®