Japan Display Said to Delay Screen Shipments to Apple
By Yuji Nakamura and Takashi Amano
October 15, 2014 5:00 PM EDT
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Japan Display Inc. (6740), a maker of mobile-device screens, forecast a surprise annual loss because of delayed shipments to Apple Inc. (AAPL) and reduced sales to Sony Corp. (6758), according to a person familiar with the matter.
Japan Display couldn’t secure the necessary parts to meet Apple orders, causing the delay, while shipments to Sony will fall in the second half, the person said, asking not to be identified because the information isn’t public. Japan Display expects a net loss of 10 billion yen ($93 million) in the year ending March, compared with a previous forecast for net income of 26.8 billion yen, according to a statement yesterday that didn’t identify its customers.
Apple is planning to unveil its latest iPads at an event today, a person familiar with the matter has said, as it seeks to revive tablet computer sales, while Sony last month widened its loss forecast to write down its faltering smartphone business. Sluggish demand for tablets and a plant closing forced Japan Display to lower forecasts, the Tokyo-based company said.
“This is a problem with production efficiency,” said Masahiko Ishino, an analyst at Advanced Research Japan Co. in Tokyo. “The client may have been Apple, but the result is that the loss in efficiency is what caused this.”
Takashi Takebayashi, a Tokyo-based spokesman for Apple, didn’t respond to a request for comment. Chie Tanaka, a spokeswoman for Japan Display, and Mai Hora, a spokeswoman for Sony, declined to comment.
IPO Flop
Japan Display, which held an initial public offering in March, has lost 51 percent since its listing. The shares were unchanged yesterday at 439 yen before the loss forecast was announced.
Apple suppliers including Nissha Printing Co. and GT Advanced Technologies Inc. have suffered as a result of their relationships with the iPhone maker, according to Amir Anvarzadeh, a manager of Japanese equity sales at BGC Partners Inc. in Singapore.
GT Advanced Technologies this month asked for bankruptcy court permission to shut down its synthetic-sapphire operations, citing terms of a contract with Apple that it called “oppressive” and “burdensome.”
The cash burn at GT Advanced’s sapphire manufacturing operations isn’t sustainable, the company said in court papers.
“Given Apple’s size it’s a very alluring opportunity for suppliers,’ said Anvarzadeh. ‘‘But by pushing its preferred technology, irrespective of yields, Apple is leaving a trail of wreckage among its suppliers.”
Fukaya Factory
Japan Display will shut its factory at Fukaya north of Tokyo, resulting in a charge of 7 billion yen, and the company won’t pay an interim dividend, it said. The company gets about 32 percent of sales from Apple while Sony is its second-largest client, accounting for 9.4 percent of revenue, according to data compiled by Bloomberg.
Japan Display was created in 2012 when Sony, Toshiba Corp. and Hitachi Ltd. spun off their panel businesses to state-backed Innovation Network Corp. of Japan after failing to keep pace with South Korea’s Samsung Electronics Co. INCJ sold the company in an initial public offering in March, with the stock plunging 15 percent on debut.
The company lowered its annual operating profit forecast to 6.5 billion yen from 40 billion yen, according to the statement.
To contact the reporters on this story: Yuji Nakamura in Tokyo at ynakamura56@bloomberg.net; Takashi Amano in Tokyo at tamano6@bloomberg.net
To contact the editors responsible for this story: Michael Tighe at mtighe4@bloomberg.net Aaron Clark, John Lear
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