The company forecast a full-year net profit of ¥59B ($530M) up from ¥24.9B last year and beating the consensus estimate of ¥41.9B Sharp hopes to achieve an operating profit of ¥150B by the fiscal year ending in March 2020.
Sharp hasn’t reported in net profit in four years but has undergone restructuring in the wake of Foxconn’s $3.8B acquisition last year. The return to profit will allow Sharp to move forward with more growth investments similar to the recent $1B investment in SoftBank’s Vision Fund.
Sharp could buy 10-20% of Toshiba Memory, and Foxconn is reportedly sounding out Apple and other U.S. companies for investments.
The goal would be an alliance that crosses borders to skirt a Japanese law restricting technology flows that affect national security.
Toshiba shares are 9.3% lower in U.S. trading. Japan's government is urging peace between Toshiba and Western Digital (NYSE:WDC), which is pushing for arbitration in seeking the chip unit. "It's very important for Toshiba and Western Digital to cooperate," said Trade Minister Hiroshige Seko.
Foxconn (OTC:FXCOF) and its Japanese subsidiary Sharp (OTCPK:SHCAF) are considering setting up an display-making plant in the U.S. in an investment that would exceed $7B, CEO Terry Gou confirmed on Sunday.
The plans, which come after President Trump's "America First" inauguration speech, still depend on many factors such as investment conditions that would have to be negotiated at the state and federal levels.
M&A activity is kicking off the headlines this week with an array of deals expected to be announced shortly.
Among them: Mid-America Apartment (NYSE:MAA)- Post Properties (NYSE:PPS), Sharp (OTCPK:SHCAY)- Foxconn (OTC:FXCOF), Honeywell (NYSE:HON)- JDA Software, Xylem (NYSE:XYL)- Sensus USA and KKR- Entertainment One (OTC:ENTMF).
The technology sector is still leading the global M&A market in 2016, but the real estate segment is not far behind.
Will 2016 outpace 2015's record in terms of acquisitions and deal value?
Building on Friday's gains, Sharp (OTCPK:SHCAY) started the week with a 10% advance after the company said Foxconn (OTC:FXCOF) completed its $3.8B takeover.
"With the risk of insolvency removed, the shares have a strong upward momentum," said Hideki Yasuda, an analyst at Ace Research Institute. "How far they climb will depend on how Foxconn will choose to restructure Sharp."
The company also received a $3B commitment line from its lenders.