TOKYO (Reuters) – Cash-strapped Japan Display Inc reported on Friday its tenth consecutive quarterly loss, hit by weak iPhone sales at its biggest client Apple Inc, increasing the urgency for the firm to close a proposed bailout with a Chinese group.
FILE PHOTO: Japan Display Inc’s logo is pictured at its headquarters in Tokyo, Japan, August 9, 2016. REUTERS/Kim Kyung-Hoon/File Photo
The liquid crystal display (LCD) maker for smartphones, which gets more than half of its revenue from Apple, posted a net loss of 83.27 billion yen ($786.53 million) in the April-June quarter, far wider than the 1.77 billion loss a year earlier.
Japan Display, money-losing for the past five years, declined to give a full-year earnings outlook, but has previously warned it cannot guarantee a return to profit this year as demand for smartphone screens stays weak.
Apple said last week sales of the smartphone fell 12% globally to $25.99 billion in the quarter to June, after a 17% drop in the prior quarter.
Japan Display has tapped a group led by Chinese investment firm Harvest Group for an 80 billion yen bailout deal for the screen maker, which includes investments from Apple and Hong Kong-based activist investor Oasis Management.
The Japanese company plans to hold a shareholders’ meeting on Sept. 27 to formalize the bailout plan.
The investment, to be completed by August next year at the latest, will give the Chinese group a 49.8% stake in Japan Display, replacing Japanese government-backed fund INCJ as the biggest shareholder.
But it remains unclear whether Japan Display can close the deal by the deadline, as the investment is dependent on certain conditions, such as no intervention by Chinese authorities and no major cuts in orders from Apple.
Analysts say Apple may be ditching LCD screens in favor of thinner, more flexible OLED (organic light-emitting diode) displays as early as next year, an additional blow to the Japanese company whose late shift to OLED screens has already cost it orders from its biggest customer.
Japan Display first agreed on the bailout deal with the Chinese group in April, but was forced to change the structure as some members of the group walked away after making checks on Japan Display’s financials.
The investor group was scheduled to hold a joint press conference on Friday, but abruptly canceled it.
Reporting by Makiko Yamazaki; Editing by Muralikumar Anantharaman