Foxconn, Sharp shares slide after Japan firm's surprise writedown


TOKYO/TAIPEI: Shares of Taiwan's Foxconn and Sharp Corp, the Japanese electronics maker it holds a 34% stake in, fell on Friday after Sharp reported a surprise $1.9 billion loss on writedowns of its panel display business and other assets.

Sharp's shares slid 7.17% early on Friday to 914 yen, on track for their biggest one-day loss since February. Foxconn's shares dropped 2.4% versus the broader Taiwan market decline of 0.3%.

Foxconn, the world's largest contract electronics maker, on Thursday attributed a 56% slump in first-quarter profit to a T$17.3 billion ($563.83 million) writedown related to its stake in Sharp and said visibility for the full year was limited.

Foxconn's net profit of T$12.8 billion was much worse than an average forecast of T$29.18 billion in profit from 13 analysts, according to Refinitiv.

Sharp said it took a hit of 220 billion yen ($1.6 billion) as it wrote down the value of building and machinery in both its LCD and OLED display businesses in Japan, and other assets.

Foxconn said it would seek an explanation from the Japanese electronics firm and "work harder on the management of our investment businesses", adding that it would ask Sharp to "adjust its management team" to improve operations if needed.

Foxconn Chief Financial Officer David Huang said on an earnings call on Thursday that Foxconn was Sharp's largest shareholder, but noted it did not have the majority vote in the Japanese company.

Huang said Sharp operates independently and is not controlled by Foxconn.

Sharp's CEO Wu Po-Hsuan previously worked for the Taiwanese company.

Formally called Hon Hai Precision Industry Co Ltd, Foxconn said it expected revenues for cloud and networking products in 2023 to be flat amid a sluggish economy, compared to a previous forecast of significant growth for those sectors.

Analysts at Taiwan's Fubon Research, in a note on Friday, forecast Foxconn's revenue would drop 9% on the year for the current quarter, citing "worse-than expected end-market demand" from items such as iPhones, MacBooks, PCs and servers. - Reuters

Foxconn , Sharp , writedown

   

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