One of the leading manufacturers of smartphone chipsets,
), may acquire a huge stake in Sharp Corporation, by investing
nearly 10 billion yen ($121.5 million).
Qualcomm is expected to make the investment of 10 billion yen
in two installments, 5 billion yen through a private placement of
new shares by the end of 2012 and the remaining part of the
investment to take place after the new panel production
An increased supply of TV-sets coupled with stiff competition
from other TV manufacturers like
) and Samsung Electronics have hugely affected the electronic
device business of Sharp thereby resulting in continuous fall in
revenue in the last few quarters. Moreover, the company incurred
a huge loss in the last quarter. So, huge investment from chipset
giant Qualcomm will immensely boost the company's business while
Prior to Qualcomm, Sharp was heavily betting on Hon Hai
Precision Industry Co. Ltd. to make the necessary investment to
its electronic business. However, continuous decline in sales
coupled with increasing debts of Sharp have considerably weakened
its market position, which in turn resulted in a failure of
investment agreement with Hon Hai Precision.
We believe that such an investment from Qualcomm will not only
help the company to further diversify its business but at the
same time will alow the company to consolidate its home device
We maintain our long-term Neutral recommendation on Qualcomm
Inc. Currently, it has a Zacks #3 Rank, implying a short-term
Hold rating on the stock.
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