Sharp looking to spin off its smartphone and tablet LCD panels business unit

Sharp Electronics is still having problems turning a profit. The company is on the verge of reporting its third net loss in the last four years and a pair of the electronic firm's banks (Mizuho Bank and Bank of Tokyo-Mitsubishi UFJ) are demanding that Sharp sell businesses that are losing money. So the manufacturer is looking to spin off its LCD panel business. The Nikkei business daily says that the division, which provides LCD panels for smartphones and tablets, will be spun off before the end of the company's year next March. Government backed Innovation Network Corporation of Japan (INCJ) could fund the new corporation with the equivalent of $840 million USD.

While Sharp is looking to spin off the unit, the source cited by the business newspaper says that the company still wants to retain a majority ownership of it. A spokesman for the company says that while it is looking at various options for its LCD panel business, a final decision has not been made. The unit accounts for one-third of Sharp's sales but has been undercut in price by Chinese competition and by Japan Display.

While analysts have called for Sharp to merge its LCD panels unit with Japan Display in order to grow in size and gain control over pricing, this does not seem like a solution that Sharp is willing to agree to. The company has also asked turnaround company Japan Industrial Solutions to invest $253 million in the panels business and to devise a rescue package from its banks.

source: Reuters