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Sharp shares fall amid fears of worsening losses | Sharp shares fall amid fears of worsening losses |
(40 minutes later) | |
Shares in Japan's electronics group Sharp have slumped to their lowest level in nearly 37 years amid fears losses will balloon this year. | |
Shares fell 12.4% to 169 yen (£1.36) after Deutsche Securities downgraded the firm's stock to "sell" from "hold" and predicted a full-year operating loss of 159bn yen. | Shares fell 12.4% to 169 yen (£1.36) after Deutsche Securities downgraded the firm's stock to "sell" from "hold" and predicted a full-year operating loss of 159bn yen. |
Meanwhile Goldman Sachs predicted an operating loss of 150bn yen. | Meanwhile Goldman Sachs predicted an operating loss of 150bn yen. |
Both figures are bigger than Sharp's own prediction of a 100bn yen loss. | Both figures are bigger than Sharp's own prediction of a 100bn yen loss. |
Sharp has already lost about $1.5bn (£956m) in market value since it released its first quarter results earlier this month. | Sharp has already lost about $1.5bn (£956m) in market value since it released its first quarter results earlier this month. |
Cutbacks | Cutbacks |
Analysts have cited worries over weak demand for liquid crystal display televisions, its main product, as Sharp continues to lose ground to rivals such as Samsung. | Analysts have cited worries over weak demand for liquid crystal display televisions, its main product, as Sharp continues to lose ground to rivals such as Samsung. |
Sharp is also under pressure from its creditors Mizuho Financial and Mitsubishi UFJ to restructure its business further in order to receive new loans. | Sharp is also under pressure from its creditors Mizuho Financial and Mitsubishi UFJ to restructure its business further in order to receive new loans. |
The company recently announced it would cut 5,000 jobs to reduce costs. | The company recently announced it would cut 5,000 jobs to reduce costs. |
Sharp is also in talks with Taiwanese electronics group Hon Hai Precision Industries to renegotiate a planned tie-up. | Sharp is also in talks with Taiwanese electronics group Hon Hai Precision Industries to renegotiate a planned tie-up. |
But whether the company will be able to shore up investor confidence remains to be seen. Interest by short-sellers is growing, according to data provider Markit, which could trigger another sell-off. | But whether the company will be able to shore up investor confidence remains to be seen. Interest by short-sellers is growing, according to data provider Markit, which could trigger another sell-off. |
Short-selling is a technique used by investors who think the price of an asset, such as shares, will fall. | Short-selling is a technique used by investors who think the price of an asset, such as shares, will fall. |
They borrow the asset from another investor and then sell it in the relevant market. The aim is to buy back the asset at a lower price and return it to its owner, making a profit along the way. | They borrow the asset from another investor and then sell it in the relevant market. The aim is to buy back the asset at a lower price and return it to its owner, making a profit along the way. |
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