Sharp shares hit by reports of Hon Hai deal rethink

Shares in Japan's Sharp, which slumped 28 percent at the end of last week after a poor earnings report, fell further Monday after Taiwan's Hon Hai Precision said it would renegotiate a deal to invest in it.

The electronics giant closed down 5.72 percent at 181 yen, its lowest level in four decades, after Friday's tumble caused by the announcement Thursday that it lost $1.77 billion in April-June and warned of a bigger full-year shortfall than first expected.

Hon Hai, parent company of manufacturing giant Foxconn which builds gadgets for Apple, said Friday it would seek to change a deal agreed in March that would see it take a 10 percent stake in Sharp for 550 yen per share.

The firm's share price reached 570 yen days after the investment plan was unveiled.

In a media interview in Taiwan aired Sunday, Hon Hai chairman Terry Gou said: "I had not expected the huge loss of Sharp."

But he also said he has been assured by Sharp that "the price is renegotiable", boosting Hon Hai shares Monday.

Gou said he hoped to complete the investment in Sharp by March 31 2013, a deal he said will be a win-win situation as Sharp had the technological expertise while Hon Hai had access to huge markets.

Sharp on Friday denied news reports that the deal was being reviewed, confusing the market and forcing investors to the sidelines, traders said.

"Investors are saying 'I don't care about the fine details, I just want out'," CLSA equity strategist Nicholas Smith said.

"Nobody doubts that Sharp has great technology, but the capital alliance with Hon Hai could very well mean that a lower cost-base firm will just walk away with Sharp's bread-and-butter. Buying on the dip is OK for cyclical stocks, but this isn't a cycle," he said.

The deal between Hon Hai and Sharp came as Japan's once mighty electronics sector struggles to haul itself out of the dire straits in which it has languished for several years.

Japan Inc. has suffered from a loss of manufacturing work to rising Asian rivals, while it has fallen behind American competitors on the cutting edge of gadgets and software, while the strong yen has made their goods more expensive overseas.

Bank of America-Merrill Lynch said: "Given the lack of clarity over the pricing of this deal, one can expect the stock price to be volatile.

"And while we can see the stock pop on the back of belief for a re-pricing, any gain here could evaporate if the latter belief is negated.".

-- Dow Jones Newswires contributed to this report --

Loading...

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • Philippines to fly over disputed South China Sea: Aquino
    Philippines to fly over disputed South China Sea: Aquino

    Philippine military and commercial aircraft will keep flying over disputed areas in the South China Sea despite Chinese warnings over the airspace, President Benigno Aquino said on Monday. "We will still fly the routes that we fly based on the international law from the various conventions we entered into," Aquino told reporters when asked whether the Philippines accepted China's position. The Chinese military last week ordered a US Navy P-8 Poseidon surveillance plane away from airspace …

  • ‘Kentex owners still in Phl’
    ‘Kentex owners still in Phl’

    The daughter of one of the Kentex Manufacturing Corp. owners has assured the government that the businessmen are still in the Philippines, contrary to some reports that they have fled the country. Barbara Ang, daughter of Kentex shareholder Veato Ang, said her father and his business partners have no plans of leaving the country despite the razing of the Valenzuela slipper factory, which killed 72 workers on May 13. Valenzuela Mayor Rex Gatchalian also stood by his promise to punish any local …

  • Gasoline prices up, diesel down
    Gasoline prices up, diesel down

    Oil companies announced yesterday a price hike of 50 centavos per liter for gasoline and a rollback of 50 centavos per liter for diesel effective at 6 a.m. today. Independent oil firms were among the first to announce the price adjustment. In an advisory, PTT Philippines, the local subsidiary of Thailand’s biggest oil firm said it cut diesel prices by 50 centavos per liter and increased gasoline prices by 50 centavos per liter. …

  • Lawmakers to review building code provisions
    Lawmakers to review building code provisions

    Lawmakers are set to review provisions of the National Building Code and Republic Act 10121, or the Philippine Disaster Risk Reduction and Management Act, to strengthen contingencies and policies to prepare the country for possible major earthquakes. The move came following proposals from Reps. Winston Castelo of Quezon City and Lito Atienza of the Buhay party-list to review the two laws and other regulations during a hearing of the House committee on Metro Manila development on the …

  • Noy: Phl may attain first world status with continued reforms
    Noy: Phl may attain first world status with continued reforms

    The Philippines’ attaining first world status may soon be imminent if significant reforms initiated by the current administration would be consistently pursued, President Aquino suggested yesterday. “Kung madidiligan ang ating mga pinunla, at makaka-graduate ang mga pinag-aaral natin upang makapasok sa maaayos na trabaho, baka po tuluyan nang nasa first world status tayo sa panahong iyon (If we water the seeds sown and those we sent to school will find better jobs, then time will come that …

  • Phl won’t recognize China air restrictions
    Phl won’t recognize China air restrictions

    The Philippines will not recognize restrictions on air and sea travel set by China in the West Philippine Sea, President Aquino said yesterday. “We will still fly the routes that we fly based on international law and the various conventions, agreements that have been entered into through various decades,” Aquino told reporters in an ambush interview after inspecting the Marikina Elementary School in preparation for the opening of classes in June. “Maybe we should not think about getting …

  • Rainy season likely in 2nd week of June
    Rainy season likely in 2nd week of June

    Filipinos may have to wait until the second or third week of June for rain, the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) said yesterday. Rene Paciente, chief of PAGASA’s marine meteorological services section, said they expect the rainy season to start in the second or third week of June. The criteria for declaring the onset of the rainy season include the prevalence of the southwest monsoon and the 25-millimeter rainfall recorded in at least five …

  • UN urged to probe torture cases under Noy’s term
    UN urged to probe torture cases under Noy’s term

    The United Nations has been asked to look into   110 cases of torture and numerous cases of illegal arrests during the Aquino administration. Cristina Palabay, Karapatan secretary-general, yesterday said the matter could be looked into when the United Nations Subcommittee on Prevention of Torture (SPT) visits from May 25 to June 3 to monitor the  implementation of the Optional protocol to the Convention Against Torture (OpCAT), which the Philippines ratified in 2012. “We enjoin the UN SPT to …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options