Is Sharp on its last legs?
Revenues fell off a cliff and losses mounted in its latest earnings report, and Sharp warned its ability to continue as a "going concern" is in doubt.
Sharp is looking distinctly less keen these days. Not only are its losses "huge," the company warned investors that there is "material doubt" that it may be able to continue as a "going concern." These are never good words to hear from a major company.
The ailing Japanese consumer-electronics manufacturer saw sales drop 16 percent year-over-year to 1.1 trillion yen ($13.7 billion) in the six months ended September 30. The company's net loss widened to 387.6 billion yen, dwarfing last year's six-month loss of 39.8 billion yen.
"Sharp is in circumstance in which material doubt about its assumed going concern is found," the company said in a statement, essentially telling investors that it doesn't know how much time is left.
At the same time, Sharp insisted that it restructuring efforts, which include massive layoffs, could help the company generate more cash flow and attract creditors to help it raise funds. If that happens, Sharp expects to "secure the necessary credit line, supported by financial institutions, and attempt to improve business performance and regain trust by monitoring the progress of this plan and implementing it steadily."
If all of that comes together, Sharp believes it can stay afloat.
Still, Sharp's restructuring efforts are a mammoth task. iPhone 5, , leaving investors to worry if it could fulfill demand.and is trying to . Meanwhile, it's trying to supply companies like Apple with mobile displays. However, its production efforts hit a snag earlier this year on the
Sharp has also been forced to revise its full-year outlook for the fiscal year ending March 2013. The company now says that its full-year revenue will hit 2.46 trillion yen, down from a previously forecast 2.5 trillion yen. Sharp expects its losses to widen from 250 billion yen to 450 billion yen.