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Sharp Shares Rise on Report Sony May Order LCD Panels

Sharp Corp., Japan's biggest maker
of liquid-crystal displays, rose the most in more than a week in
Tokyo trading after the Nikkei newspaper reported the company is
poised to win LCD television panel orders from Sony Corp.

Sharp gained 5.2 percent, the biggest advance since Feb. 14,
to 2,100 yen at the close on the Tokyo Stock Exchange. Sony plans
to buy LCDs from Sharp by as early as the next fiscal year,
Nikkei reported on Feb. 23, without citing anyone. Spokesmen at
both companies declined to comment on the report.

Orders from Sony, the world's largest LCD TV maker, would
fit into Sharp President Mikio Katayama's plans to reduce the
company's reliance on its own Aquos TVs to meet panel demand.
Sharp, which sells about 80 percent of its displays to itself,
convinced Toshiba Corp. in December to become a customer.

“The news that Sharp will supply Sony can be viewed as
evidence of such a shift in the business model,'' Yoshiharu Izumi,
a Tokyo-based analyst with JPMorgan Chase & Co., wrote in a
report today. “Whether this strategy succeeds hinges upon
whether LCD panel prices remain stable over the long term and
whether Sharp can be cost competitive enough to battle with Asian
manufacturers.''

Attracting Sony is “very positive news for Sharp,''
Goldman Sachs Group Inc. analyst Yuji Fujimori wrote in a report
today. A deal would benefit both companies and help their shares,
Deutsche Bank AG analyst Yasuo Nakane wrote in a report.

External Customers

External customers will probably account for more than 30
percent of Sharp's LCD sales in the fiscal year starting April 1,
from 20 percent currently, Katayama told reporters in January.

Sony may purchase as many as 5 million LCDs from Sharp in
the year ending March 2010, according to Nikkei. Sharp spokesman
Hiroshi Takenami and Sony spokesman Shigenori Yoshida declined to
comment on the report.

Samsung Electronics Co. expects to maintain its
“cooperative'' relationship with Sony, said James Chung, a
spokesman at the Suwon, South Korea-based company. Samsung is
still negotiating with Sony about jointly investing in a new so-
called eighth-generation production line, Chung said.

Samsung, the world's largest LCD maker, is Sony's main
supplier. Tokyo-based Sony, the maker of Bravia TVs, overtook
Samsung as the world's largest LCD TV vendor during the fourth
quarter, according to estimates this month from market researcher
DisplaySearch.

Sony shares rose 2.4 percent to 5,140 yen, compared with the
3.1 percent advance by the Nikkei 225 Stock Average.