Sharp Posts Record Quarter, LCD TV Sales Double Y-o-Y

| About: Sharp Corp. (SHCAY)
Sharp Corp (OTCPK:SHCAY) reported record net income for the 1st quarter fueled by a doubling of sales and shipments of LCD TVs. Its cellular phone handset segment was also strong, increasing sales by 24% y-o-y and shipments by 22%. Sharp is maintaining its full-year forecast leaving open the chance of an upward revision this autumn. Management seems rather confident of its LCD TV segment and that has to be good news for shareholders given recent concerns of falling prices and rising inventories in the industry.

Radio Nikkei (Japanese language source) reported that there was only a brief mention in Sharp's conference call of its second LCD TV panel production plant known as Kameyama 2. Sharp will launch production of 8th generation panels this October as planned.

Some analysts have voiced concern that Sharp could be hurt by supply shortages in its effort to combat falling panel prices with higher volume production. Despite acknowledging that Sharp is already running at near full capacity, a director and senior manager of the firm did point out that there were no changes to production levels and there is also no issue of having produced too many panels or mounting inventory. He said that although inventory is increasing overall, it is still lower than it was this time last year.

Regarding falling LCD TV prices, especially in the 32" and smaller range, Sharp was able to limit its price reductions to 4% versus an industry wide 30% drop. It did so by boosting sales of larger sized LCD TVs and those with high-definition capability. Sharp's VP said that he expects further price drops will be moderate for Sharp going into this year's holiday season since he anticipates strong demand.

In consolidated Q1 reporting versus the same period in the year prior, Sharp increased Net Sales by 12.6%, Operating Income by 13.7%, Income before Income Taxes and Minority Interests by 24.0%, and Net Income by 23.1%.

For its full-year forecast (period ending March 31, 2007), Sharp is maintaining expected Net Sales at 3 trillion yen ($25.75b; a 7.3% increase y-o-y), Operating Income at 180 billion yen ($1.55b, +10% y-o-y), and Net Income at 100 billion yen ($858m, +12.8% y-o-y).

Sharp has cash and cash equivalents of 299 billion yen ($2.57b) versus long-term liabilities totaling 203 billion yen ($1.74b).

Sharp's ordinary shares (Tokyo: 6753) gained 3.05% ahead of its earnings announcement. Its 1,892 yen close equates to $16.24 for its ADRs, which closed yesterday at $16.15, having gained 7.7% on the day likely spurred by an analyst upgrade (see "related" below).

* Click here for a link to financial info section of Sharp's investor relations site.

* Click here for coverage of Sharp's Q1 earnings by The Wall Street Journal (paid sub req).


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