OSAKA -- Putting a finishing touch on its recovery, Sharp is now ready to support its Taiwanese parent Hon Hai Precision Industry by collaborating on advanced technologies like 8K televisions and artificial intelligence.
The Japan-based manufacturer said Tuesday it will raise 200 billion yen ($1.81 billion) through a public offering of new shares to buy and retire preferred stock held by its two main lenders, Mizuho Bank and MUFG Bank. This completes a series of turnaround steps for Sharp. Meanwhile, Hon Hai, also known as Foxconn, has been hit hard by weak sales of Apple's iPhone X.
Since becoming a unit of Foxconn in 2016, Sharp has streamlined its operations under the leadership of Hon Hai executive Tai Jeng-wu and turned its first net profit in four years in fiscal 2017. But rating companies have kept the "speculative" designation for Sharp stock because of the banks' preferred shares.
Retiring those shares would thus improve Sharp's rating and allow it to raise funds on more favorable terms.
"We consider this an important step to increase freedom of management decisions," said Tai.
As the market looks to Sharp for a game plan for its future, the company is citing 8K ultrahigh-definition technology and artificial intelligence combined with the "internet of things" as drivers of growth in its medium-term business plan through fiscal 2019.
The company released the world's first 8K TV last autumn and is moving to expand the lineup while rivals struggle to catch up. And the purchase of the personal computer business of Toshiba, announced Tuesday, will help strengthen internet of things operations.
Tai is confident that the deal will pay off soon, saying Toshiba Client Solutions' 400 or so engineers in Japan and abroad will create synergies with Sharp's internet of things and AI teams to maximize earnings potential.
Parent Hon Hai has suffered from the slowdown of the iPhone X, which it assembles for Apple. The world's largest contract manufacturer logged a 7% decline in net profit to 138.7 billion New Taiwan dollars ($4.66 billion) last year, marking the first drop in nine years.
Sharp's 8K push is in line with Hon Hai's drive to wean itself off contract manufacturing and boost its own brand operations. Tai's ability to carry out the business plan will be put to the test.