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Hon Hai will not cover loss from investment in Sharp in Q2

2012/08/05 19:45:03

Taipei, Aug. 5 (CNA) The chairman of Taiwan's Hon Hai Precision Industry Co. said Sunday that the company would not write off second quarter losses from its investment in Japanese electronics maker Sharp Corp.

Speaking after a local television interview, Terry Gou told reporters that the decision was made after the two companies reached agreement in Tokyo Friday to renegotiate the price of the stake that Hon Hai has agreed to invest in the Japanese firm.

Gou added that the purchase of the stake has not occurred because it had not yet been approved by Taiwan's Investment Commission under the Ministry of Economic Affairs.

Meanwhile, shares of Hon Hai tumbled 3.77 percent to close at NT$81.6 (US$2.7) in Taipei on Friday.

Hon Hai, the main manufacturer of Apple Inc. products, announced its acquisition in late March of a roughly 10 percent stake in Sharp for US$800 million, making it the Japanese company's largest shareholder.

In late June, however, Hon Hai estimated it would probably make a write-down of more than NT$6.4 billion (US$213.8 million) to cover its losses from the investment in Sharp, based upon the original set price of 550 Japanese yen per share.

A massive sell-off in Sharp's shares came Friday after the struggling TV maker, one day earlier, revised its forecast for the year to a net loss of 250 billion Japanese yen from an earlier estimate of a 30 billion yen net loss.

Sharp also announced it would cut 5,000 jobs, its first workforce reduction since 1950.

(By Jeffrey Wu)