Sharp has cut its annual operating profit outlook by one-third, citing sluggish growth in mobile handsets. The Japanese-based company, which is the handset market leader in its domestic market, said today that it expects operating profit of JPY130 billion (US$1.25 billion) in the year to March 2009, down from its previous forecast of JPY195 billion. According to a poll of analysts conducted by Reuters, analysts had been predicting profit of JPY170.1 billion. Weaker mobile sales has also reportedly hurt demand for its image sensor chips and small LCD panels that go into handsets.
The Japanese handset market is considered to have been hit by the recent strategy by the country’s three main mobile operators – NTT DoCoMo, KDDI and Softbank – to move away from handset subsidies in favour of a low monthly subscription model. According to recent figures from Jeita, Japan’s electronics industry association, handset sales dropped 29.3 percent in the year to July 2008, while the average lifespan of a Japanese handset is now over three years. It has been reported that some of Sharp’s smaller rivals in Japan – such as Panasonic, Fujitsu, NEC and Toshiba – may be looking to merge in order to cope with the slowdown.