Sharp Slashes Profit Forecast on Phones, LCD TVs

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Sharp has revised sharply down its profit forecast after seeing poor sales of cell phones in Japan and lower profits in the flat-panel TV business during the last six months.

The company now expects net profit for the April to September period to be ¥25 billion (US$242 million), a reduction of 44 percent from its previous forecast. Sales during the same period are expected to be ¥1.6 trillion, or 8 percent less than it had previously forecast, Sharp said.

Most of the blame for the cut was laid at the feet of a "considerable sales decline" in Japan's cellular market. Local carriers have been switching the way they sell handsets to consumers so that most customers pay the cost of the phone in installments over 24 months. The system, which was introduced as the carriers lowered the subsidy they offered on new handsets, has had the effect of making many users wait longer to replace their phones.

Sharp also said that lower prices of LCD (liquid crystal display) TVs as a result of fierce competition in the market has led to lower-than-expected profits in that business.

The company also cut its outlook for the financial year from April 2008 to March 2009. Net profit for the year is now forecast to be ¥60 billion, a cut of 43 percent from Sharp's previous forecast, and sales are predicted to be ¥3.4 trillion, which is a 5 percent cut in the forecast.

Sharp is due to report its first-half results later in October.

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